Enzyme I (EI), the first component of the bacterial phosphotransfer signal transduction system, undergoes one of the largest substrate-induced interdomain rearrangements documented to date. Here we characterize the perturbations generated by two small molecules, the natural substrate phosphoenolpyruvate and the inhibitor α-ketoglutarate, on the structure and dynamics of EI using NMR, small-angle X-ray scattering and biochemical techniques. The results indicate unambiguously that the open-to-closed conformational switch of EI is triggered by complete suppression of micro- to millisecond dynamics within the C-terminal domain of EI. Indeed, we show that a ligand-induced transition from a dynamic to a more rigid conformational state of the C-terminal domain stabilizes the interface between the N- and C-terminal domains observed in the structure of the closed state, thereby promoting the resulting conformational switch and autophosphorylation of EI. The mechanisms described here may be common to several other multidomain proteins and allosteric systems.