Previous studies have established that at low pH human insulin decomposition proceeds through a two-step mechanism involving rate-limiting intramolecular formation of a cyclic anhydride intermediate at the C-terminal AsnA21 followed by intermediate partitioning to various products, most notably desamido insulin and covalent dimers, in both aqueous solution and in the amorphous (lyophilized) solid state. This study examines the product distribution resulting from insulin degradation in lyophilized powders as a function of water content and the phase behavior of the solid (glassy versus rubbery) between pH 3 and 5. In amorphous solids at low water content (glassy state), the cyclic anhydride intermediate of insulin reacts predominantly with water to form deamidated insulin, whereas the intermolecular reaction with another insulin molecule to form a covalent dimer accounts for ≤15% of the total degradation. Increasing water content reduces the glass transition temperature of insulin to <35 °C, and covalent dimer formation becomes increasingly favored relative to deamidation. An increase in solid-state pH also favors dimerization as deprotonation of the terminal amino groups of insulin renders them more nucleophilic. Covalent dimerization was almost totally suppressed by incorporation into a glassy matrix of trehalose, which both minimizes molecular mobility and physically separates the insulin molecules. The kinetics and product distribution of human insulin in lyophilized powders between pH 3 and 5 illustrate the differential sensitivities of various solid-state reaction types to the effects of water activity and solid-phase behavior. The intramolecular cyclization at the AsnA21 position requires only short-range conformational flexibility and thus is only modestly restricted even in the glassy state. On the other hand, the competing bimolecular reactions involving either water or another molecule of insulin combining with the intermediate anhydride are dependent on molecular mobility of the reactants, in accord with predictions of free volume theory. In the glassy state, deamidation (reaction with water) is favored because of the restricted molecular mobility of proteins in rigid matrices. Increasing plasticization with increasing water content favors covalent aggregate formation because of the higher dependence of protein mobility on free volume within the solid matrix.