Aflatoxin oxidase (AFO), an enzyme isolated from Armillariella tabescens, has been reported to degrade aflatoxin B1 (AFB1). However, recent studies reported sequence and structure similarities with the dipeptidyl peptidase III (DPP III) family of enzymes and confirmed peptidase activity toward DPP III substrates. In light of these investigations, an extensive computational study was performed in order to improve understanding of the AFO functions. Steered MD simulations revealed long‐range domain motions described as protein opening, characteristic for DPPs III and necessary for substrate binding. Newly identified open and partially open forms of the enzyme closely resemble those of the human DPP III orthologue. Docking of a synthetic DPP III substrate Arg2‐2‐naphthylamide revealed a binding mode similar to the one found in crystal structures of human DPP III complexes with peptides with the S1 and S2 subsites’ amino acid residues conserved. On the other hand, no energetically favorable AFB1 binding mode was detected, suggesting that aflatoxins are not good substrates of AFO. High plasticity of the zinc ion coordination sphere within the active site, consistent with that of up to date studied DPPs III, was observed as well. A detailed electrostatic analysis of the active site revealed a predominance of negatively charged regions, unsuitable for the binding of the neutral AFB1. The present study is in line with the most recent experimental study on this enzyme, both suggesting that AFO is a typical member of the DPP III family.