The ability of enzymes to operate in organic solvent is now widely accepted and is the basis for extensive research in enzymology. The challenge is to select the solvent media that allows the modulation of enzyme activity. For a rational selection of a solvent, it is necessary to understand the effect of organic solvent molecules on enzyme structure and the enzymatic reaction on a molecular level. To gain such insight, we combined experimental kinetics studies with full atomic molecular dynamics simulations and found a correlation between the activity of Candida antarctica lipase B (CALB) [for the esterification reaction between butyric acid and ethanol at a fixed water activity] and the binding of the solvent/substrate molecules in the active site region of CALB. We have investigated the influence of four organic solvents hexane (HEX), methyl tertiary butyl ether (MTBE), acetonitrile (ACN), and tertiary butanol (TBU)-on the catalytic activity of CALB for the esterification reaction. The solvents have been chosen on the basis of different polarity/functional groups. Our study shows that these organic solvents do not alter the overall conformation of CALB; rather, the solvent effects on the performance of the enzyme may be ascribed to binding of solvent molecules to the enzyme active site region and the solvation energy of substrate molecules in the different solvents. Polar solvent molecules interact strongly with CALB and compete with the substrate to bind to the active site region, resulting in an inhibitory effect which is also confirmed by the binding free energies for the solvent and substrate molecules estimated from the simulations. Consequently, the catalytic activity of CALB decreases in polar solvents. This effect is significant, and CALB is over 10 orders of magnitude more active in nonpolar solvents (HEX and MTBE) than in the polar solvents (ACN and TBU). TBU molecules show an exceptional behavior because the solvent molecule forms an extensive hydrogen bond network within the CALB active site region suggesting that solvent molecules rich on hydrogen bond acceptors and donors are poor solvents when used for lipase-catalyzed esterification reactions.