The Fic domain was recently shown to catalyze AMPylation--the transfer of AMP from ATP to hydroxyl side chains of diverse eukaryotic proteins, ranging from RhoGTPases to chaperon BiP. We have carried out a series of explicit solvent molecular dynamics (MD) simulations up to 1 μs duration on the apo, holo, and substrate/product bound IbpA Fic domain (IbpAFic2). Simulations on holo-IbpAFic2 revealed that binding of Mg2+ to α and β phosphates is crucial for preserving catalytically important contacts involving ATP. Comparative analysis of the MD trajectories demonstrated how binding of ATP allosterically induces conformational changes in the distal switch II binding region of Fic domains thereby aiding in substrate recognition. Our simulations have also identified crucial aromatic-aromatic interactions which stabilize the orientation of the catalytic histidine for inline nucleophilic attack during AMPylation, thus providing a structural basis for the evolutionary conservation of these aromatic residue pairs in Fic domains. On the basis of analysis of interacting interface residue pairs that persist over the microsecond trajectory, we identified a tetrapeptide stretch involved in substrate recognition. The structure-based genome-wide search revealed a distinct conservation pattern for this segment in different Fic subfamilies, further supporting its proposed role in substrate recognition. In addition, combined use of simulations and phylogenetic analysis has helped in the discovery of a new subfamily of Fic proteins that harbor a conserved Lys/Arg in place of the inhibitory Glu of the regulatory helix. We propose the novel possibility of auto-enhancement of AMPylation activity in this new subfamily via the movement of regulatory helix, in contrast to auto-inhibition seen in most Fic proteins. [ABSTRACT FROM AUTHOR]