Human dipeptidyl peptidase III (DPP III) is a two domain metallo-peptidase from the M49 family. The wide interdomain cleft and broad substrate specificity suggest that this enzyme could experience significant conformational change. Long (>100 ns) molecular dynamics (MD) simulations of DPP III revealed large range conformational changes of the protein, suggesting the pre-existing equilibrium model for a substrate binding. The binding free energy calculations revealed tighter binding of the preferred synthetic substrate Arg-Arg-2-naphtylamide to the "closed" than to the "open" DPP III conformation. Our assumption that Asp372 plays a crucial role in the large scale interdomain closure was proved by the MD simulations of the Asp372Ala variant. During the same simulation time, the variant remained more "open" than the wild type protein. Apparently, Ala was not as efficient as Asp in establishing the interdomain interactions. According to the MM-PBSA calculations, the electrostatic component of the free energy of solvation turned out to be higher for the "closed" protein than for its less compact form. However, the gain in entropy due to water released from the interdomain cleft nicely balanced this negative effect.