Preorganizing a ligand in the conformation it adopts upon binding to a protein has long been considered to be an effective way to improve affinity by making the binding entropy more favorable. However, recent thermodynamic studies of a series of complexes of the Grb2 SH2 domain with peptide analogues having constrained and flexible replacements for a phosphotyrosine residue revealed that less favorable binding entropies may result from constraining ligands in their biologically active conformations. Toward probing the origin of this unexpected finding, we examined the complexes of four phosphotyrosine-derived analogues with the Grb2 SH2 domain using molecular dynamics simulations with a polarizable force field. Significantly, the computed values for the relative binding free energies, entropies, and enthalpies of two pairs of constrained and unconstrained ligands reproduced the trends that were determined experimentally, although the relative differences were overestimated. These calculations also revealed that a large fraction of the ligands lacking the constraining element exist in solution as compact, macrocyclic-like structures that are stabilized by interactions between the phosphate groups and the amide moieties of the C-terminal pY+2 residues. In contrast, the three-membered ring in the constrained ligands prevents the formation of such macrocyclic structures, leading instead to globally extended, less ordered conformations. Quasiharmonic analysis of these conformational ensembles suggests that the unconstrained ligands possess significantly lower entropies in solution, a finding that is consistent with the experimental observation that the binding entropies for the unconstrained ligands are more favorable than for their constrained counterparts. This study suggests that introducing local constraints in flexible molecules may have unexpected consequences, and a detailed understanding of the conformational preferences of ligands in their unbound states is a critical prerequisite to correlating changes in their chemical structure with protein binding entropies and enthalpies.