Class D β-lactamases have risen to notoriety due to their wide spread in bacterial pathogens, propensity to inactivate clinically important β-lactam antibiotics, and ability to withstand inhibition by the majority of classical β-lactamase inhibitors. Understanding the catalytic mechanism of these enzymes is thus vitally important for the development of novel antibiotics and inhibitors active against infections caused by antibiotic-resistant bacteria. Here we report an in crystallo time-resolved study of the interaction of the class D β-lactamase CDD-1 from Clostridioides difficile with the diazobicyclooctane inhibitor, avibactam. We show that the catalytic carboxylated lysine, a residue that is essential for both acylation and deacylation of β-lactams, is sequestered within an internal sealed pocket of the enzyme. Time-resolved snapshots generated in this study allowed us to observe decarboxylation of the lysine and movement of CO2 and water molecules through a transient channel formed between the lysine pocket and the substrate binding site facilitated by rotation of the side chain of a conserved leucine residue. These studies provide novel insights on avibactam binding to CDD-1 and into the catalytic mechanism of class D β-lactamases in general.