While being a thoroughly studied model of dynamic allostery in a small protein, the pathway of signal transduction in the PDZ3 domain has not been fully determined. Here, we investigate peptide binding to the PDZ3 domain by conventional and fully data-driven analyses of molecular dynamics simulations. First, we identify isoleucine 37 as a key residue by widely used computational procedures such as cross-correlation and community network analysis. Simulations of the Ile37Ala mutant show disruption of the coordinated movements of spatially close regular elements of secondary structure. Then, we employ a recently developed unsupervised, data-driven procedure to determine the optimal reaction coordinate (slowest-relaxation eigenvector) of peptide binding. We use this reaction coordinate to improve sampling by restarting additional simulations from the transition state region. Significant differences in the distributions of some of the pairwise residue distances in the bound and unbound states emerge from the projection onto the optimal reaction coordinate. The unsupervised analysis shows that allosteric signaling is transduced from the &beta 2 strand, which forms part of the peptide binding site, to the spatially adjacent &beta3 and &beta 4 strands, and from there to the &alpha 3 helix. The domino-like transmission of a (peptide binding) signal along β strands and &alpha helices that are close in three-dimensional space is likely to be a general mechanism of allostery in single-domain proteins.