Proteins are essential parts of living organisms and participate in virtually every process within cells. As the genomic sequences for increasing number of organisms are completed, research into how proteins can perform such a variety of functions has become much more intensive because the value of the genomic sequences relies on the accuracy of understanding the encoded gene products. Although the static three-dimensional structures of many proteins are known, the functions of proteins are ultimately governed by their dynamic characteristics, including the folding process, conformational fluctuations, molecular motions, and protein-ligand interactions. In this review, the physicochemical principles underlying these dynamic processes are discussed in depth based on the free energy landscape (FEL) theory. Questions of why and how proteins fold into their native conformational states, why proteins are inherently dynamic, and how their dynamic personalities govern protein functions are answered. This paper will contribute to the understanding of structure-function relationship of proteins in the post-genome era of life science research.