Eukaryotic translation initiation factor 2 (eIF2) is a heterotrimeric GTPase, which plays a critical role in protein synthesis regulation. eIF2-GTP binds Met-tRNAi to form the eIF2-GTP•Met-tRNAi ternary complex (TC), which is recruited to the 40S ribosomal subunit. Following GTP hydrolysis, eIF2-GDP is recycled back to TC by its guanine nucleotide exchange factor (GEF), eIF2B. Phosphorylation of the eIF2α subunit in response to various cellular stresses converts eIF2 into a competitive inhibitor of eIF2B, which triggers the integrated stress response (ISR). Dysregulation of eIF2B activity is associated with a number of pathologies, including neurodegenerative diseases, metabolic disorders, and cancer. However, despite decades of research, the underlying molecular mechanisms of eIF2B action and regulation remain unknown. Here we employ a combination of NMR, fluorescence spectroscopy, site-directed mutagenesis, and thermodynamics to elucidate the mechanisms of eIF2B action and its regulation by phosphorylation of the substrate eIF2. We present: (i) a novel mechanism for the inhibition of eIF2B activity, whereby eIF2α phosphorylation destabilizes an autoregulatory intramolecular interaction within eIF2α; and (ii) the first structural model for the complex of eIF2B with its substrate, eIF2-GDP, reaction intermediates, apo-eIF2 and eIF2-GTP, and product, TC, with direct implications for the eIF2B catalytic mechanism.