The Z mutation (E342K) of α1-antitrypsin (α1-AT), carried by 4% of Northern Europeans, predisposes to early onset of emphysema due to decreased functional α1-AT in the lung and to liver cirrhosis due to accumulation of polymers in hepatocytes. However, it remains unclear why the Z mutation causes intracellular polymerization of nascent Z α1-AT and why 15% of the expressed Z α1-AT is secreted into circulation as functional, but polymerogenic, monomers. Here, we solve the crystal structure of the Z-monomer and have engineered replacements to assess the conformational role of residue Glu-342 in α1-AT. The results reveal that Z α1-AT has a labile strand 5 of the central β-sheet A (s5A) with a consequent equilibrium between a native inhibitory conformation, as in its crystal structure here, and an aberrant conformation with s5A only partially incorporated into the central β-sheet. This aberrant conformation, induced by the loss of interactions from the Glu-342 side chain, explains why Z α1-AT is prone to polymerization and readily binds to a 6-mer peptide, and it supports that annealing of s5A into the central β-sheet is a crucial step in the serpins' metastable conformational formation. The demonstration that the aberrant conformation can be rectified through stabilization of the labile s5A by binding of a small molecule opens a potential therapeutic approach for Z α1-AT deficiency.