Insulin degrading enzyme (IDE) is responsible for the metabolism of insulin and plays a role in clearance of the Aβ peptide associated with Alzheimer's disease. Unlike most proteolytic enzymes, IDE, which consists of four structurally related domains and exists primarily as a dimer, exhibits allosteric kinetics, being activated by both small substrate peptides and polyphosphates such as ATP.The crystal structure of a catalytically compromised mutant of IDE has electron density for peptide ligands bound at the active site in domain 1 and a distal site in domain 2. Mutating residues in the distal site eliminates allosteric kinetics and activation by a small peptide, as well as greatly reducing activation by ATP, demonstrating that this site plays a key role in allostery. Comparison of the peptide bound IDE structure (using a low activity E111F IDE mutant) with unliganded wild type IDE shows a change in the interface between two halves of the clamshell-like molecule, which may enhance enzyme activity by altering the equilibrium between closed and open conformations. In addition, changes in the dimer interface suggest a basis for communication between subunits.Our findings indicate that a region remote from the active site mediates allosteric activation of insulysin by peptides. Activation may involve a small conformational change that weakens the interface between two halves of the enzyme.