The molecular mechanism underpinning regulation of eukaryotic translation initiation factor eIF4E by 4E-BP1 has remained unclear. We use isothermal calorimetry, circular dichroism, NMR, and computational modeling to analyze how the structure of the eIF4E-binding domain of 4E-BP1 determines its affinity for the dorsal face of eIF4E and thus the ability of this regulator to act as a competitive inhibitor. This work identifies the key role of solvent-facing amino acids in 4E-BP1 that are not directly engaged in interactions with eIF4E. These amino acid residues influence the propensity of the natively unfolded binding motif to fold into a conformation, including a stretch of α-helix, that is required for tight binding to eIF4E. In so doing, they contribute to a free energy landscape for 4E-BP1 folding that is poised so that phosphorylation of S65 at the C-terminal end of the helical region can modulate the propensity of folding, and thus regulate the overall free energy of 4E-BP1 binding to eIF4E, over a physiologically significant range. Thus, phosphorylation acts as an intramolecular structural modulator that biases the free energy landscape for the disorder-order transition of 4E-BP1 by destabilizing the α-helix to favor the unfolded form that cannot bind eIF4E. This type of order-disorder regulatory mechanism is likely to be relevant to other intermolecular regulatory phenomena in the cell.