Biomolecular function is realized by recognition, and increasing evidence shows that recognition is determined not only by structure but also by flexibility and dynamics. We explored a biomolecular recognition process that involves a major conformational change - protein folding. In particular, we explore the binding-induced folding of IA3, an intrinsically disordered protein that blocks the active site cleft of the yeast aspartic proteinase saccharopepsin (YPrA) by folding its own N-terminal residues into an amphipathic alpha helix. We developed a multi-scaled approach that explores the underlying mechanism by combining structure-based molecular dynamics simulations at the residue level with a stochastic path method at the atomic level. Both the free energy profile and the associated kinetic paths reveal a common scheme whereby IA3 binds to its target enzyme prior to folding itself into a helix. This theoretical result is consistent with recent time-resolved experiments. Furthermore, exploration of the detailed trajectories reveals the important roles of non-native interactions in the initial binding that occurs prior to IA3 folding. In contrast to the common view that non-native interactions contribute only to the roughness of landscapes and impede binding, the non-native interactions here facilitate binding by reducing significantly the entropic search space in the landscape. The information gained from multi-scaled simulations of the folding of this intrinsically disordered protein in the presence of its binding target may prove useful in the design of novel inhibitors of aspartic proteinases.