Protein tyrosine phosphatase 1B (PTP1B) is a promising target for the treatment of obesity and type II diabetes. Allosteric inhibitors can stabilize an active conformation of PTP1B by hindering the conformational transition of the WPD loop of PTP1B from the open to the closed state. Here, the umbrella sampling molecular dynamics (MD) simulations were employed to compute the reaction path of the conformational transition of PTP1B, and the snapshots extracted from the MD trajectory were clustered into 58 conformational groups based on the key conformational parameter. Then, the impact of the conformational change of the WPD loop on the interactions between the allosteric site of PTP1B and an allosteric inhibitor BB3 was explored by using the MM/GBSA binding free energy calculations and free energy decomposition analysis. The simulation results show that the binding free energy of BB3 increases gradually from the open to the closed conformation of the WPD loop, providing the molecular mechanism of allosteric inhibition. Correlation analysis of the different energy terms indicates that the allosteric inhibitor with more negative van der Waals contribution cannot only exhibit stronger binding affinity but also hinder the swing of the WPD loop more effectively. Besides, it is found that the energy contribution of Lys292 in the α7 helix undergoes significant change, which reveals that Lys292 is not only the key residue for ligand binding but also plays an important role in hindering the conformational change of the WPD loop.