Carboxylesterases are important enzymes responsible for the hydrolysis and metabolism of numerous pharmaceuticals and xenobiotics. These enzymes are potently inhibited by trifluoromethyl ketone containing (TFK) inhibitors. We demonstrated that the ketone hydration state was affected by the surrounding chemical moieties and was related to inhibitor potency, with inhibitors that favored the gem-diol conformation exhibiting greater potency. Ab initio calculations were performed to determine the energy of hydration of the ketone, and the values were correlated with esterase inhibition data for a series of carboxylesterase inhibitors. This system was examined in three different mammalian models (human liver microsomes, murine liver microsomes, and commercial porcine liver esterase) and in an insect enzyme preparation (juvenile hormone esterase). In all cases, the extent of ketone hydration was strongly correlated with biological potency. Our results showed a very strong correlation with the extent of hydration, accounting for 94% of activity for human liver microsome esterase inhibition (p < 0.01). The atomic charge on the carbon atom of the carbonyl group in the TFK also strongly correlated with inhibitor potency, accounting for 94% of inhibition activity in human liver microsomes (p < 0.01). In addition, we provide crystallographic evidence of intramolecular hydrogen bonding in sulfur-containing inhibitors and relate these data to gem-diol formation. This study provides insight into the mechanism of carboxylesterase inhibition and raises the possibility that inhibitors that too strongly favor the gem-diol configuration have decreased potency due to low rate of ketone formation.