Allosteric regulation of enzymatic activity forms the basis for controlling a plethora of vital cellular processes. While the mechanism underlying regulation of multimeric enzymes is generally well understood and proposed to primarily operate via conformational selection, the mechanism underlying allosteric regulation of monomeric enzymes is poorly understood. Here we monitored for the first time allosteric regulation of enzymatic activity at the single molecule level. We measured single stochastic catalytic turnovers of a monomeric metabolic enzyme (Thermomyces lanuginosus Lipase) while titrating its proximity to a lipid membrane that acts as an allosteric effector. The single molecule measurements revealed the existence of discrete binary functional states that could not be identified in macroscopic measurements due to ensemble averaging. The discrete functional states correlate with the enzyme's major conformational states and are redistributed in the presence of the regulatory effector. Thus, our data support allosteric regulation of monomeric enzymes to operate via selection of preexisting functional states and not via induction of new ones.