The interaction of a synthetic tetrafluorotyrosyl peptide substrate with the activated tyrosine kinase domain of the insulin receptor was studied by steady-state kinetics and x-ray crystallography. The pH-rate profiles indicate that the neutral phenol, rather than the chemically more reactive phenoxide ion, is required for enzyme-catalyzed phosphorylation. The pK(a) of the tetrafluorotyrosyl hydroxyl is elevated 2 pH units on the enzyme compared with solution, whereas the phenoxide anion species behaves as a weak competitive inhibitor of the tyrosine kinase. A structure of the binary enzyme-substrate complex shows the tetrafluorotyrosyl OH group at hydrogen bonding distances from the side chains of Asp(1132) and Arg(1136), consistent with elevation of the pK(a). These findings strongly support a reaction mechanism favoring a dissociative transition state.