Activity of enzymes, such as protein tyrosine phosphatases (PTPs), is often associated with structural changes in the enzyme, resulting in selective and stereospecific reactions with the substrate. To investigate the effect of a substrate on the motions occurring in PTPs, we have performed molecular dynamics simulations of PTP1B and PTP1B complexed with a high-affinity peptide DADEpYL, where pY stands for phosphorylated tyrosine. The peptide sequence is derived from the epidermal growth factor receptor (EGFR988-993). Simulations were performed in water for 1 ns, and the concerted motions in the protein were analyzed using the essential dynamics technique. Our results indicate that the predominately internal motions in PTP1B occur in a subspace of only a few degrees of freedom. Upon substrate binding, the flexibility of the protein is reduced by approximately 10%. The largest effect is found in the protein region, where the N-terminal of the substrate is located, and in the loop region Val198-Gly209. Displacements in the latter loop are associated with the motions in the WPD loop, which contains a catalytically important aspartic acid. Estimation of the pKa of the active-site cysteine along the trajectory indicates that structural inhomogeneity causes the pKa to vary by approximately +/-1 pKa unit. In agreement with experimental observations, the active-site cysteine is negatively charged at physiological pH.