PON1 is the best-studied member of a family of enzymes called serum paraoxonases, or PONs, identified in mammals (including humans) and other vertebrates as well as in invertebrates. PONs exhibit a range of important activities, including drug metabolism and detoxification of organophosphates such as nerve agents. PON1 resides on HDL (the “good cholesterol”) and is also involved in the prevention of atherosclerosis. Despite this wealth of activities, the identity of PON1's native substrate, namely, the substrate for which this enzyme and other enzymes from the PON family evolved, remains unknown. To elucidate the substrate preference and other details of PON1 mechanism of catalysis, structure−activity studies were performed with three groups of substrates that are known to be hydrolyzed by PON1:  phosphotriesters, esters, and lactones. We found that the hydrolysis of aryl esters is governed primarily by steric factors and not the pK_a of the leaving group. The rates of hydrolysis of aliphatic esters are much slower and show a similar dependence on the pK_a of the leaving group to that of the nonenzymatic reactions in solution, while the aryl phosphotriesters show much higher dependence than the respective nonenzymatic reaction. PON1-catalyzed lactone hydrolysis shows almost no dependence on the pK_a of the leaving group, and unlike all other substrates, lactones seem to differ in their K_M rather than k_cat values. These, and the relatively high rates measured with several lactone substrates (k_cat/K_M ≈ 10⁶ M^-1 s^-1) imply that PON1 is in fact a lactonase.