Two sites of ligand interaction in acetylcholinesterase (AChE) were first demonstrated in ligand binding studies and later confirmed by crystallography, site-specific mutagenesis, and molecular modeling: an acylation site at the base of the active site gorge and a peripheral site at its mouth. We recently introduced a steric blockade model which demonstrated how small peripheral site ligands such as propidium may inhibit substrate hydrolysis [Szegletes, T., Mallender, W. D., and Rosenberry, T. L. (1998) Biochemistry 37, 4206-4216]. In this model, the only effect of a bound peripheral site ligand is to decrease the association and dissociation rate constants for an acylation site ligand without altering the equilibrium constant for ligand binding to the acylation site. Here, we first provide evidence that not only rate constants for substrates but also dissociation rate constants for their hydrolysis products are decreased by bound peripheral site ligand. Previous reaction schemes for substrate hydrolysis by AChE were extended to include product dissociation steps, and acetylthiocholine hydrolysis rates in the presence of propidium under nonequilibrium conditions were simulated with assigned rate constants in the program SCoP. We next showed that cationic substrates such as acetylthiocholine and 7-acetoxy-N-methylquinolinium (M7A) bind to the peripheral site as well as to the acylation site. The neurotoxin fasciculin was used to report specifically on interactions at the peripheral site. Analysis of inhibition of fasciculin association rates by these substrates revealed KS values of about 1 mM for the peripheral site binding of acetylthiocholine and 0.2 mM for the binding of M7A. The AChE reaction scheme was further extended to include substrate binding to the peripheral site as the initial step in the catalytic pathway. Simulations of the steric blockade model with this scheme were in reasonable agreement with observed substrate inhibition for acetylthiocholine and M7A and with mutual competitive inhibition in mixtures of acetylthiocholine and M7A. Substrate inhibition was explained by blockade of product dissociation when substrate is bound to the peripheral site. However, our analyses indicate that the primary physiologic role of the AChE peripheral site is to accelerate the hydrolysis of acetylcholine at low substrate concentrations.