Systematic analysis of molecular recognition is critical for understanding the biological function of macromolecules. For the immunomodulatory protein D-dopachrome tautomerase (D-DT), the mechanism of protein-ligand interactions is poorly understood. Here, 17 carefully designed protein variants and wild type (WT) D-DT were interrogated with an array of complementary techniques to elucidate the structural basis of ligand recognition. Utilization of a substrate and two selective inhibitors with distinct binding profiles offered previously unseen mechanistic insights into D-DT-ligand interactions. Our results demonstrate that the C-terminal region serves a key role in molecular recognition via regulation of the active site opening, protein-ligand interactions, and conformational flexibility of the pocket's environment. While our study is the first comprehensive analysis of molecular recognition for D-DT, the findings reported herein promote the understanding of protein functionality and enable the design of new structure-based drug discovery projects.