Taxol is a commonly used antitumor agent that hyperstabilizes microtubules and prevents cell division. The interaction of Taxol with tubulin and the microtubule has been studied through a wide array of experimental techniques; however, the exact molecular mechanism by which Taxol stabilizes microtubules has remained elusive. In this study, through the use of large-scale molecular simulations, we show that Taxol affects the interactions between the M and H1-S2 loops of adjacent tubulin dimers leading to more stable interprotofilament interactions. More importantly, we demonstrate that Taxol binding leads to a significant increase in the dynamics and flexibility of the portion of beta-tubulin that surrounds the bound nucleotide and makes contact with the alpha-monomer of the next dimer in the protofilament. We conclude that this increase in flexibility allows the microtubule to counteract the conformational changes induced by nucleotide hydrolysis and keeps the protofilaments in a straight conformation, resulting in a stable microtubule.