Phenylalanine hydroxylase catalyzes the stereospecific hydroxylation of l-phenylalanine, the committed step in the degradation of this amino acid. We have solved the crystal structure of the ternary complex (hPheOH–Fe(II)�BH₄�THA) of the catalytically active Fe(II) form of a truncated form (ΔN1–102/ΔC428–452) of human phenylalanine hydroxylase (hPheOH), using the catalytically active reduced cofactor 6(R)-l-erythro-5,6,7,8-tetrahydrobiopterin (BH₄) and 3-(2-thienyl)-l-alanine (THA) as a substrate analogue. The analogue is bound in the second coordination sphere of the catalytic iron atom with the thiophene ring stacking against the imidazole group of His285 (average interplanar distance 3.8�) and with a network of hydrogen bonds and hydrophobic contacts. Binding of the analogue to the binary complex hPheOH–Fe(II)�BH₄ triggers structural changes throughout the entire molecule, which adopts a slightly more compact structure. The largest change occurs in the loop region comprising residues 131–155, where the maximum r.m.s. displacement (9.6�) is at Tyr138. This loop is refolded, bringing the hydroxyl oxygen atom of Tyr138 18.5� closer to the iron atom and into the active site. The iron geometry is highly distorted square pyramidal, and Glu330 adopts a conformation different from that observed in the hPheOH–Fe(II)�BH₄ structure, with bidentate iron coordination. BH₄ binds in the second coordination sphere of the catalytic iron atom, and is displaced 2.6� in the direction of Glu286 and the iron atom, relative to the hPheOH–Fe(II)�BH₄ structure, thus changing its hydrogen bonding network. The active-site structure of the ternary complex gives new insight into the substrate specificity of the enzyme, notably the low affinity for l-tyrosine. Furthermore, the structure has implications both for the catalytic mechanism and the molecular basis for the activation of the full-length tetrameric enzyme by its substrate. The large conformational change, moving Tyr138 from a surface position into the active site, may reflect a possible functional role for this residue.