Terpenes (isoprenoids) represent the most functionally and structurally diverse group of natural products. Terpenes are assembled from two building blocks, isopentenyl diphosphate (IPP) and dimethylallyl diphosphate (DMAPP or DPP), by prenyltransferases (PTSs). Geranyl pyrophosphate synthase (GPPS) is the enzyme that assembles DPP and IPP in the first step of chain elongation during isoprenoid biosynthesis. The mechanism by which GPPS assembles the terpene precursor remains unknown; elucidating this mechanism will help in development of new technology to generate novel natural product-like scaffolds. With classic and QM/MM MD simulations, an "open-closed" conformation change of the catalytic pocket was observed in the GPPS active site at its large subunit (LSU), and a critical salt bridge between Asp91(in loop 1) and Lys239(in loop 2) was identified. The salt bridge is responsible for opening or closing the catalytic pocket. Meanwhile, the small subunit (SSU) regulates the size and shape of the hydrophobic pocket to flexibly host substrates with different shapes and sizes (DPP/GPP/FPP, C5/C10/C15). Further QM/MM MD simulations were carried out to explore the binding modes for the different substrates catalyzed by GPPS. Our simulations suggest that the key residues (Asp91, Lys239, and Gln156) are good candidates for site-directed mutagenesis and may help in protein engineering.