PhoPQ-activated gene P (PagP) is an integral membrane enzyme that transfers the sn-1 palmitate chain from phospholipid to lipopolysaccharide in Gram-negative bacteria. A recent x-ray crystallographic study established that the sn-1 palmitate binds within a long cavity at the center of the PagP beta barrel. The high mobility required to permit substrate entry into the central core of the barrel contrasts with the need to assemble a well defined structure in the peripheral loops, where many key catalytic residues are located. To gain insight into how dynamics relate to the function of PagP, the enzyme was reconstituted into CYFOS-7, a detergent that supports enzymatic activity. Under these conditions, PagP exists in equilibrium between two states, relaxed (R) and tense (T). The kinetics and thermodynamics of the interchange have been investigated by (1)H-(15)N NMR spectroscopy, with Delta H = -10.7 kcal/mol and Delta S = -37.5 cal/mol.K for the R--> T transition. A comparison of chemical shifts between the two states indicates that major structural changes occur in the large extracellular L1 loop and adjacent regions of the beta barrel. In addition to the R,T interconversion, other conformational exchange processes are observed in the R state, showing it to be quite flexible. Thus a picture emerges in which substrate entry is facilitated by the mobility of the R state, whereas the relatively rigid T state adopts a radically different conformation in a region of the protein known to be essential for catalysis. The ability to switch between dynamically distinct states may be a key feature of the catalytic cycle of PagP.