Sarcoplasmic reticulum Ca2+-ATPase (SERCA) and phospholamban (PLB) are essential components of the cardiac Ca2+ transport machinery. PLB phosphorylation at residue Ser16 (pSer16) enhances SERCA activity in the heart via an unknown structural mechanism. Here, we report a fully atomistic model of SERCA bound to phosphorylated PLB and study its structural dynamics on the microsecond time scale using all-atom molecular dynamics simulations in an explicit lipid bilayer and water environment. The unstructured N-terminal phosphorylation domain of PLB samples different orientations and covers a broad area of the cytosolic domain of SERCA but forms a stable complex mediated by pSer16 interactions with a binding site formed by SERCA residues Arg324/Lys328. PLB phosphorylation does not affect the interaction between the transmembrane regions of the two proteins; however, pSer16 stabilizes a disordered structure of the N-terminal phosphorylation domain that releases key inhibitory contacts between SERCA and PLB. We found that PLB phosphorylation is sufficient to guide the structural transitions of the cytosolic headpiece that are required to produce a competent structure of SERCA. We conclude that PLB phosphorylation serves as an allosteric molecular switch that releases inhibitory contacts and strings together the catalytic elements required for SERCA activation. This atomistic model represents a vivid atomic-resolution visualization of SERCA bound to phosphorylated PLB and provides previously inaccessible insights into the structural mechanism by which PLB phosphorylation releases SERCA inhibition in the heart.