The complex between flavin mononucleotide (FMN) and apo-flavodoxin is dominated by isoalloxazine-stacking interactions and 5'-phosphate hydrogen bonds. We show here that FMN binding to Desulfovibrio desulfuricans apo-flavodoxin is faster and the affinity is higher in the presence of inorganic phosphate as compared to in its absence (I=110 mM, pH 7, 20 degrees C). The transition-state of complex formation was investigated by phi-value analysis using Trp60Ala and Tyr98Ala apo-flavodoxin variants. We find that Tyr98 is highly involved in the FMN/protein transition state independent of inorganic phosphate, whereas the participation of Trp60 is modulated by inorganic phosphate. The phi-value for Trp60 is higher without phosphate, implying that at this condition stronger binding of Trp60 is required in the transition state to assure successful complex formation. Consistent with the experimental data, all-atom molecular dynamic simulations reveal that the presence of an anion in the phosphate subsite restricts the mobility of the Trp60-containing loop in terms of both backbone and side-chain movements, but has no effect on the Tyr98-containing loop. The overall thermodynamic stability of apo-flavodoxin is higher in the presence of inorganic phosphate as compared to in its absence (I=110 mM, pH 7, 20 degrees C). Kinetic experiments reveal that the additional stability originates in slower unfolding. The combined experimental and computational observations demonstrate that phosphate has an ordering effect on the Trp60-containing loop, which positions Trp60 favorably for FMN binding and increases the barrier for protein unfolding.