AChE is a glycoprotein that exists is several forms. For images of acetylcholinesterase's structure displayed in ribbon form, go to As a result of the variety in chemical structure, some forms of AChE are hydrophobic, while others are hydrophilic. The hydrophilic species generally work within the cell to break down excess concentrations of intracellular ACh. The lipid-linked (hydophobic) varieties, however, are the primary agents of ACh inactivation, working at the synaptic cleft or the neuromuscular junction to break ACh into its component parts: acetate and choline. Lipid-linked species of AChE are embedded within the post-synaptic membrane and placed strategically close to the post-synaptic receptor molecules in order to ensure quick inactivation of ACh.

Though the individual chemical qualities and anatomical arrangements vary widely between the various forms of AChE, the mechanism of catalysis for all the species remains strikingly similar. In all cases, the active site of AChE is made up of two subsites, both of which are critical to the breakdown of ACh. The anionic site serves to bind a molecule of ACh to the enzyme. When first discovered, this site was thought to be made up of one or more negatively charged groups which electrostatically interacted with the positively charged quaternary nitrogen of the ACh molecule. More recently, however, it is thought that hydrophobic interactions are equally, if not more important in binding this region of the substrate to the enzyme.

Once the ACh is bound, the hydrolytic reaction occurs at a second region of the active site called the esteratic subsite. Here, the ester bond of ACh is broken, releasing acetate and choline. Choline is then either temporarily trapped within the junctional folds of the muscular endplate or immediately taken up again by the high affinity choline uptake (HACU) system on the presynaptic membrane. Acetate, however, becomes covalently bonded to serine residues within the esteratic subsite, forming a temporary acetylated form of AChE. A molecule of water then reacts with this intermediate, liberating the acetate group, which diffuses into the surrounding medium. What remains is an active form of the enzyme, ready to react with a newly released molecule of ACh.