The ileal lipid binding protein (ILBP or I-BABP) binds bile salts with positive cooperativity and has unusual site selectivity, whereby cholic acid binds preferentially in one site and chenodeoxycholic in another, despite both sites having an affinity for both ligands and the ligands only differing by a single hydroxyl group. Previous studies of the human variant have assumed that the ligand/protein binding ratio is 2:1, but we show, using electrospray ionization mass spectroscopy, that human ILBP binds bile acids with a 3:1 ratio, even at low protein and ligand concentrations. Docking calculations and molecular dynamics (MD) simulations identify an allosterically active binding site on the protein exterior that induces a change from a closed conformation to an open one, characterized by a movement of one of the α-helices by ~10° with respect to the β-clam shell. Additional independent MD simulations of several hundred nanoseconds implicate the change between conformations in the mechanisms of both cooperativity and ligand site selectivity.