Here, we have elucidated the substrate recognition mechanism by a prokaryotic H+/oligopeptide cotransporter, YdgR, using isothermal titration calorimetry. Under acidic conditions (pH 6.0), the binding of a dipeptide, Val-Ala, to YdgR elicited endothermic enthalpy, which compensated for the increase in entropy due to dipeptide binding. A series of dipeptides were used in the binding titration. The dipeptides represent Val-X and X-Val, where X is Ala, Ser, Val, Tyr, or Phe. Most dipeptides revealed endothermic enthalpy, which was completely compensated by the increase in entropy due to dipeptide binding. The change in enthalpy due to binding correlated well with the change in entropy, whereas the Gibbs free energy involved in the binding of the dipeptide to YdgR remained unchanged irrespective of dipeptide sequences, implying that the binding reaction was driven by entropy, that is, the release of bound water molecules in the binding pocket. It is also important to clarify that, based on the prediction of water molecules in the ligand-binding pocket of YdgR, the release of three bound water molecules in the putative substrate binding pocket occurred through binding to YdgR. In the comparison of Val-X and X-Val dipeptides, the N-terminal region of the binding pocket might contain more bound water molecules than the C-terminal region. In light of these findings, we suggest that bound water molecules might play an important role in substrate recognition and binding by YdgR.