Nicotinamidases catalyze the hydrolysis of nicotinamide to nicotinic acid and ammonia. Nicotinamidases are absent in mammals but function in NAD(+) salvage in many bacteria, yeast, plants, protozoa, and metazoans. We have performed structural and kinetic investigations of the nicotinamidase from Saccharomyces cerevisiae (Pnc1). Steady-state product inhibitor analysis revealed an irreversible reaction in which ammonia is the first product released, followed by nicotinic acid. A series of nicotinamide analogues acting as inhibitors or substrates were examined, revealing that the nicotinamide carbonyl oxygen and ring nitrogen are critical for binding and reactivity. X-ray structural analysis revealed a covalent adduct between nicotinaldehyde and Cys167 of Pnc1 and coordination of the nicotinamide ring nitrogen to the active-site zinc ion. Using this structure as a guide, the function of several residues was probed via mutagenesis and primary (15)N and (13)C kinetic isotope effects (KIEs) on V/K for amide bond hydrolysis. The KIE values of almost all variants were increased, indicating that C-N bond cleavage is at least partially rate limiting; however, a decreased KIE for D51N was indicative of a stronger commitment to catalysis. In addition, KIE values using slower alternate substrates indicated that C-N bond cleavage is at least partially rate limiting with nicotinamide to highly rate limiting with thionicotinamide. A detailed mechanism involving nucleophilic attack of Cys167, followed by elimination of ammonia and then hydrolysis to liberate nicotinic acid, is discussed. These results will aid in the design of mechanism-based inhibitors to target pathogens that rely on nicotinamidase activity.