The mitogen-activated protein kinases (MAPKs) are key components of cellular signal transduction pathways, which are down-regulated by the MAPK phosphatases (MKPs). Catalytic activity of the MKPs is controlled both by their ability to recognize selective MAPKs and by allosteric activation upon binding to MAPK substrates. Here, we use a combination of experimental and computational techniques to elucidate the molecular mechanism for the ERK2-induced MKP3 activation. Mutational and kinetic study shows that the 334FNFM337 motif in the MKP3 catalytic domain is essential for MKP3-mediated ERK2 inactivation and is responsible for ERK2-mediated MKP3 activation. The long-term molecular dynamics (MD) simulations further reveal a complete dynamic process in which the catalytic domain of MKP3 gradually changes to a conformation that resembles an active MKP catalytic domain over the time scale of the simulation, providing a direct time-dependent observation of allosteric signal transmission in ERK2-induced MKP3 activation.