The binding thermodynamics of the HIV-1 protease inhibitor acetyl pepstatin and the substrate Val-Ser-Gln-Asn-Tyr-Pro-Ile-Val-Gln, corresponding to one of the cleavage sites in the gag, gag-pol polyproteins, have been measured by direct microcalorimetric analysis. The results indicate that the binding of the peptide substrate or peptide inhibitor is entropically driven; i.e., it is characterized by an unfavorable enthalpy and a favorable entropy change, in agreement with a structure-based thermodynamic analysis based upon an empirical parameterization of the energetics. Dissection of the binding enthalpy indicates that the intrinsic interactions are favorable and that the unfavorable enthalpy originates from the energy cost of rearranging the flap region in the protease molecule. In addition, the binding is coupled to a negative heat capacity change. The dominant binding force is the increase in solvent entropy that accompanies the burial of a significant hydrophobic surface. Comparison of the binding energetics obtained for the substrate with that obtained for synthetic nonpeptide inhibitors indicates that the major difference is in the magnitude of the conformational entropy change. In solution, the peptide substrate has a higher flexibility than the synthetic inhibitors and therefore suffers a higher conformational entropy loss upon binding. This higher entropy loss accounts for the lower binding affinity of the substrate. On the other hand, due to its higher flexibility, the peptide substrate is more amenable to adapt to backbone rearrangements or subtle conformational changes induced by mutations in the protease. The synthetic inhibitors are less flexible, and their capacity to adapt is more restricted. The expected result is a more pronounced effect of mutations on the binding affinity of the synthetic inhibitors. On the basis of the thermodynamic differences in the mode of binding of substrate and synthetic inhibitors, it appears that a key factor to understanding resistance is given by the relative balance of the different forces that contribute to the binding free energy and, in particular, the balance between conformational and solvation entropy.