PlaF is a membrane-bound phospholipase A1 from Pseudomonas aeruginosa that is involved in the remodeling of the membrane phospholipid composition. It modulates virulence-associated signaling and metabolic networks, although it remains unclear whether P. aeruginosa's physiological changes are elicited by altered phospholipid composition or by free fatty acids (FFAs) released from phospholipids. Previously, we identified that undecanoic acid bound to the active site of PlaF in the crystal structure inhibits PlaF activity and triggers the formation of PlaF dimers. However, the detailed molecular mechanism governing the inhibition and dimerization of PlaF by medium-chain length FFAs has remained elusive. In this study, we used unbiased and biased molecular dynamics simulations and free energy computations to assess how FFAs localized in different cell compartments can interact with active and inactive configurations of PlaF and how this may regulate PlaF activity. Our results suggest that medium-chain length FFAs can inhibit PlaF both competitively and non-competetively, in line with previous experiments. They stabilize inactive dimeric PlaF when localized in the upper membrane leaflet and enter a tunnel connected to the catalytic triad when localized in the periplasmic space. We predict mutations for either case to probe these effects experimentally. Our findings support the suggestion from in vivo results shown here and in vitro results presented previously that PlaF activity may be regulated through a product-feedback mechanism. They also open up new perspectives on how to inhibit PlaF, which has been suggested as a promising target for developing new antibiotics against P. aeruginosa.