Conformational dynamics play a crucial role in protein functions. A molecular-level understanding of the conformational transition dynamics of proteins is fundamental for studying protein functions. Here, we report a study of real-time conformational dynamic interaction between calcium-activated calmodulin (CaM) and C28W peptide using single-molecule fluorescence resonance energy transfer (FRET) spectroscopy and imaging. Plasma membrane Ca-ATPase protein interacts with CaM by its peptide segment that contains 28 amino acids (C28W). The interaction between CaM and the Ca-ATPase is essential for cell signaling. However, details about its dynamic interaction are still not clear. In our current study, we used Cyanine3 labeled CaM (N-domain) and Dylight 649 labeled C28W peptide (N-domain) to study the conformational dynamics during their interaction. In this study, the FRET can be measured when the CaM-C28W complex is formed and only be observed when such a complex is formed. By using single-molecule FRET efficiency trajectory and unique statistical approaches, we were able to observe multiple binding steps with detailed dynamic features of loosely bound and tightly bound state fluctuations. The C-domain of CaM tends to bind with C28W first with a higher affinity, followed by the binding of the CaM N-domain. Due to the comparatively high flexibility and low affinity of the N-domain and the presence of multiple anchor hydrophobic residues on the peptide, the N-domain binding may switch between selective and non-selective binding states, while the C-domain remains strongly bound with C28W. The results provide a mechanistic understanding of the CaM signaling interaction and activation of the Ca-ATPase through multiple-state binding to the C28W. The new single-molecule spectroscopic analyses demonstrated in this work can be applied for broad studies of protein functional conformation fluctuation and protein-protein interaction dynamics.