Allosteric effect implies ligand binding at one site leading to structural and/or dynamical changes at a distant site. PDZ domains are classic examples of dynamic allostery without conformational changes, where distal side-chain dynamics is modulated on ligand binding and the origin has been attributed to entropic effects. In this work, we unearth the energetic basis of the observed dynamic allostery in a PDZ3 domain protein using molecular dynamics simulations. We demonstrate that electrostatic interaction provides a highly sensitive yardstick to probe the allosteric modulation in contrast to the traditionally used structure-based parameters. There is a significant population shift in the hydrogen-bonded network and salt bridges involving side chains on ligand binding. The ligand creates a local energetic perturbation that propagates in the form of dominolike changes in interresidue interaction pattern. There are significant changes in the nature of specific interactions (nonpolar/ polar) between interresidue contacts and accompanied side-chain reorientations that drive the major redistribution of energy. Interestingly, this internal redistribution and rewiring of side-chain interactions led to large cancellations resulting in small change in the overall enthalpy of the protein, thus making it difficult to detect experimentally. In contrast to the prevailing focus on the entropic or dynamic effects, we show that the internal redistribution and population shift in specific electrostatic interactions drive the allosteric modulation in the PDZ3 domain protein.A llosteric regulation of proteins plays a key role in physiological cell functions, biochemical and signal transduction pathways, and drug discovery (1-3). It has remained a challenge to understand how the thermodynamic perturbation caused by ligand binding at one site would propagate and modulate the structure and dynamics of distal regions of proteins. The prevailing models of structure-based allostery (4, 5) do not apply to the more recent examples of allostery without conformational change such as PDZ domain (6), CAP dimer (7), and met repressor (8). These examples have triggered the concept of dynamic allostery, where the side-chain dynamics is modulated on ligand binding and the origin has often been attributed to changes in the conformational entropy (9, 10). The modern view of allostery invokes a thermodynamic picture, where a population shift among preexisting conformational states occurs on binding the allosteric effector (11-13). It has also been suggested in the context of allostery without conformational change that "not observed does not imply that it is not there" (10) because crystallographic techniques may not resolve the relatively minor population shifts. An interesting idea has emerged that all proteins might be allosteric in nature (14).PDZ domain has been a classic model system to study single domain allostery without major structural changes (9, 15, 16) (Fig. 1A). PDZ domains are evolutionary conserved proteinprotein interaction module...