The yeast IA3 polypeptide consists of only 68 residues, and the free inhibitor has little intrinsic secondary structure. IA3 showed subnanomolar potency toward its target, proteinase A from Saccharomyces cerevisiae, and did not inhibit any of a large number of aspartic proteinases with similar sequences/structures from a wide variety of other species. Systematic truncation and mutagenesis of the IA3 polypeptide revealed that the inhibitory activity is located in the N-terminal half of the sequence. Crystal structures of different forms of IA3 complexed with proteinase A showed that residues in the N-terminal half of the IA3 sequence became ordered and formed an almost perfect alpha-helix in the active site of the enzyme. This potent, specific interaction was directed primarily by hydrophobic interactions made by three key features in the inhibitory sequence. Whereas IA3 was cut as a substrate by the nontarget aspartic proteinases, it was not cleaved by proteinase A. The random coil IA3 polypeptide escapes cleavage by being stabilized in a helical conformation upon interaction with the active site of proteinase A. This results, paradoxically, in potent selective inhibition of the target enzyme.