Sequence and structural homology suggests that MP-4 protein from Mucuna pruriens belongs to Kunitz-type protease inhibitor family. However, biochemical assays showed that this protein is a poor inhibitor of trypsin. To understand the basis of observed poor inhibition, thermodynamics and molecular dynamics (MD) simulation studies on binding of MP-4 to trypsin were carried out. Molecular dynamics simulations revealed that temperature influences the spectrum of conformations adopted by the loop regions in the MP-4 structure. At an optimal temperature, MP-4 achieves maximal binding while above and below the optimum temperature, its functional activity is hampered due to unfavourable flexibility and relative rigidity, respectively. The low activity at normal temperature is due to the widening of the conformational spectrum of the Reactive Site Loop (RSL) that reduces the probability of formation of stabilizing contacts with trypsin. The unique sequence of the RSL enhances flexibility at ambient temperature and thus reduces its ability to inhibit trypsin. This study shows that temperature influences the function of a protein through modulation in the structure of functional domain of the protein. Modulation of function through appearance of new sequences that are more sensitive to temperature may be a general strategy for evolution of new proteins.