Enzyme function is often dependent on fluctuations between inactive and active structural ensembles. Adenylate kinase isolated from Escherichia coli (AK(e)) is a small phosphotransfer enzyme in which interconversion between inactive (open) and active (closed) conformations is rate limiting for catalysis. AK(e) has a modular three-dimensional architecture with two flexible substrate-binding domains that interact with the substrates AMP, ADP and ATP. Here, we show by using a combination of biophysical and mutagenic approaches that the interconversion between open and closed states of the ATP-binding subdomain involves partial subdomain unfolding/refolding in an otherwise folded enzyme. These results provide a novel and, possibly general, molecular mechanism for the switch between open and closed conformations in AK(e).