Product inhibition is a well-known phenomenon in enzymology. The influence of fatty acids in lipolysis has long been attributed to interfacial effects because of the peculiarity of lipases acting in the interface of a two-phase system. This study investigated the mechanism by which dodecanoic acid completely inhibits olive oil hydrolysis by lipase from Acinetobacter sp. OPA 55. Kinetic and spectroscopic measurements, the substrate specificity of the enzyme in hydrolysis and esterification reactions, and the interfacial behavior of the effecters and chemical modifications to the catalytically active amino acids indicated a direct protein-fatty acid interaction in the catalytic cavity of the lipase-a true competitive product inhibition.