The general characteristics of acetylcholinesterase are described. The mechanism of action of the enzyme is considered primarily in relation to the two steps in the hydrolysis of acetylcholine, the acetylation and deacetylation reactions. Competitive and non-competitive inhibition, and inhibitions by hydrogen ion and by substrate, are explained in terms of this two-step process. On the basis of the available evidence, a suggestion is made regarding the configuration of groups in the active center.