The smallest cryptophane ever synthesized, cryptophane-1.1.1 (1), whose internal volume is estimated to be 81 A(3), exhibits the highest binding constant (10000 M-1 at 293 K) in organic solution for xenon encapsulation determined to date. The very slow kinetics of decomplexation on the NMR time scale results in an extremely sharp Xe-129 NMR signal for the Xe@1 complex, which shows an unexpected low-frequency shift. The free energy of activation for decomplexation of xenon at 293 K is Delta G(out) = 64.9 +/- 3 kJ mol(-1) (Delta H-out = 43.2 +/- 1.6 kJ mol(-1); Delta S-out = -74 +/- 3 J mol(-1) K-1). These properties suggest that the cryptophane core of 1 is optimized for use in sensing applications in combination with laser-polarized xenon.