The carbohydrate esterase family 7 (CE7) members are acetyl esterases that possess unusual substrate specificity for cephalosporin C and 7-amino-cephalosporanic acid. This family containing the α/β hydrolase fold has a distinctive substrate profile that allows it to carry out hydrolysis of esters containing diverse alcohol moieties while maintaining narrow specificity for an acetate ester. Here we investigate the structural basis of this preference for small acyl groups using the crystal structure of the thermostable Thermotoga maritima CE7 acetyl esterase (TmAcE) complexed with a non-cognate substrate analog. The structure determined at 1.86 Å resolution provides direct evidence for the location of the largely hydrophobic and rigid substrate binding pocket in this family. Furthermore, a three-helix insertion domain near the catalytic machinery shapes the substrate binding site. The structure reveals two residues (Pro228 and Ile276) which constitute a hydrophobic rigid binding surface for the acyl group of the ester and thus restricts the size of the acyl group that be accommodated. In combination with previous literature on kinetic properties of the enzyme, our studies suggest that these residues determine the unique specificity of the TmAcE for short straight chain esters. The structure provides a template for focused attempts to engineer the CE7 enzymes for enhanced stability, selectivity or activity for biocatalytic applications. © 2016 Elsevier Inc.