Human acyl protein thioesterases (APTs) catalyze the depalmitoylation of S‐acylated proteins attached to the plasma membrane, facilitating reversible cycles of membrane anchoring and detachment. We previously showed that a bacterial APT homologue, FTT258 from the gram‐negative pathogen Francisella tularensis, exists in equilibrium between a closed and open state based on the structural dynamics of a flexible loop overlapping its active site. Although the structural dynamics of this loop are not conserved in human APTs, the amino acid sequence of this loop is highly conserved, indicating essential but divergent functions for this loop in human APTs. Herein, we investigated the role of this loop in regulating the catalytic activity, ligand binding, and protein folding of human APT1, a depalmitoylase connected with cancer, immune, and neurological signaling. Using a combination of substitutional analysis with kinetic, structural, and biophysical characterization, we show that even in its divergent structural location in human APT1 that this loop still regulates the catalytic activity of APT1 through contributions to ligand binding and substrate positioning. We confirmed previously known roles for multiple residues (Phe72 and Ile74) in substrate binding and catalysis while adding new roles in substrate selectivity (Pro69), in catalytic stabilization (Asp73 and Ile75), and in transitioning between the membrane binding β‐tongue and substrate‐binding loops (Trp71). Even conservative substitution of this tryptophan (Trp71) fulcrum led to complete loss of catalytic activity, a 13°C decrease in total protein stability, and drastic drops in ligand affinity, indicating that the combination of the size, shape, and aromaticity of Trp71 are essential to the proper structure of APT1. Mixing buried hydrophobic surface area with contributions to an exposed secondary surface pocket, Trp71 represents a previously unidentified class of essential tryptophans within α/β hydrolase structure and a potential allosteric binding site within human APTs.