The structure of the HIV-1 protease in complex with a pseudo-C2 symmetric inhibitor, which contains a central difluoroketone motif, has been determined with X-ray diffraction data extending to 1.7 A resolution. The electron density map clearly indicates that the inhibitor is bound in a symmetric fashion as the hydrated, or gemdiol, form of the difluoroketone. Refinement of the complex reveals a unique, and almost symmetric, set of interactions between the geminal hydroxyl groups, the geminal fluorine atoms, and the active-site aspartate residues. Several hydrogen bonding patterns are consistent with that conformation. The lowest energy hydrogen disposition, as determined by semiempirical energy calculations, shows only one active site aspartate protonated. A comparison between the corresponding dihedral angles of the difluorodiol core and those of a hydrated peptide bond analog, calculated ab-initio, shows that the inhibitor core is a mimic of a hydrated peptide bond in a gauche conformation. The feasibility of an anti-gauche transition for a peptide bond after hydration is verified by extensive molecular dynamics simulations. The simulations suggest that rotation about the C-N scissile bond would readily occur after hydration and would be driven by the optimization of the interactions of peptide side-chains with the enzyme. These results, together with the characterization of a transition state leading to bond breakage via a concerted exchange of two protons, suggest a proteolysis mechanism whereby only one active site aspartate is initially protonated. The steps of this mechanism are: asymmetric binding of the substrate; hydration of the peptidic carbonyl by an active site water; proton translocation between the active site aspartate residues simultaneously with carbonyl hydration; optimization of the binding of the entire substrate facilitated by the flexible structure of the hydrated peptide bond, which, in turn, forces the hydrated peptide bond to assume a gauche conformation; simultaneous proton exchange whereby one hydroxyl donates a proton to the charged aspartate, and, at the same time, the nitrogen lone pair accepts a proton from the other aspartate; and, bond breakage and regeneration of the initial protonation state of the aspartate residues.