Sarcolipin (SLN) mediates Ca2+ transport and metabolism in muscle by regulating the activity of the Ca2+ pump SERCA. SLN has a conserved luminal C-terminal domain that contributes to its functional divergence among homologous SERCA regulators, but the precise mechanistic role of this domain remains poorly understood. We used all-atom molecular dynamics (MD) simulations of SLN totaling 77.5 μs to show that the N- (NT) and C-terminal (CT) domains function in concert. Analysis of the MD simulations showed that serial deletions of the SLN C-terminus do not affect the stability of the peptide nor induce dissociation of SLN from the membrane but promote a gradual decrease in both the tilt angle of the transmembrane helix and the local thickness of the lipid bilayer. Mutual information analysis showed that the NT and CT domains communicate with each other in SLN and that interdomain communication is partially or completely abolished upon deletion of the conserved segment Tyr29-Tyr31 as well as by serial deletions beyond this domain. Phosphorylation of SLN at residue Thr5 also induces changes in the communication between the CT and NT domains, which thus provides additional evidence for interdomain communication within SLN. We found that interdomain communication is independent of the force field used and lipid composition, which thus demonstrates that communication between the NT and CT domains is an intrinsic functional feature of SLN. We propose the novel hypothesis that the conserved C-terminus is an essential element required for dynamic control of SLN regulatory function.