Vancomycin is one of the most important and commonly used antibiotics in hospitals. Despite numerous investigations, however, it is not clear how vancomycin recognizes its site of action in the bacterial cell wall. The increasing incidence of bacterial resistance to vancomycin makes it imperative to understand these recognition determinants so that alternative agents may be developed. Herein we report the first crystal structure of vancomycin. The structure resolves a long-standing controversy about carboxylate recognition by vancomycin, suggests a possible cooperative mechanism linking ligand binding and dimerization, and demonstrates the operation of a novel intramolecular flap which occupies the binding site in the absence of ligand.