The PDZ domains, a large family of peptide recognition proteins, bind to the C-terminal segment of membrane ion channels and receptors thereby mediating their localization. The peptide binding process is not known in detail and seems to differ among different PDZ domains. For the third PDZ domain of the synaptic protein PSD-95 (PDZ3), a lock-and-key mechanism was postulated on the basis of the almost perfect overlap of the crystal structures in the presence and absence of its peptide ligand. Here, peptide binding to PDZ3 is investigated by explicit solvent molecular dynamics (MD) simulations (for a total of 1.3 μs) and the cut-based free energy profile method for determining free energy barriers and basins. The free energy landscape of apo PDZ3 indicates that there are multiple basins within the native state. These basins differ by the relative orientation of the α2 helix and β2 strand, the two secondary structure elements that make up the peptide binding site. Only the structure with the smallest aperture of the binding site is populated in the MD simulations of the complex whose analysis reveals that the peptide ligand binds to PDZ3 by selecting one of three conformations. Thus, the dynamical information obtained by the atomistic simulations increment the static, that is, partial, picture of the PDZ3 binding mechanism based on the X-ray crystallography data. Importantly, the simulation results show for the first time that conformational selection is a possible mechanism of peptide binding by PDZ domains in general.