Methylation of a conserved lysine in C-terminal domain of the molecular chaperone Hsp90 was shown previously to affect its in vivo function. However, the underlying mechanism remained elusive. Through a combined experimental and computational approach, this study shows that this site is very sensitive to sidechain modifications and crucial for Hsp90 activity in vitro and in vivo. Our results demonstrate that this particular lysine serves as a switch point for the regulation of Hsp90 functions by influencing its conformational cycle, ATPase activity, co-chaperone regulation, and client activation of yeast and human Hsp90. Incorporation of the methylated lysine via genetic code expansion specifically shows that upon modification, the conformational cycle of Hsp90 is altered. Molecular dynamics simulations including the methylated lysine suggest specific conformational changes that are propagated through Hsp90. Thus, methylation of the C-terminal lysine allows a precise allosteric tuning of Hsp90 activity via long distances.