Regulation of the c-Abl (ABL1) tyrosine kinase is important because of its role in cellular signaling, and its relevance in the leukemiogenic counterpart (BCR-ABL). Both auto-inhibition and full activation of c-Abl are regulated by the interaction of the catalytic domain with the Src Homology 2 (SH2) domain. The mechanism by which this interaction enhances catalysis is not known. We combined computational simulations with mutagenesis and functional analysis to find that the SH2 domain conveys both local and global effects on the dynamics of the catalytic domain. Locally, it regulates the flexibility of the xcexb1C helix in a fashion reminiscent of cyclins in cyclin-dependent kinases, reorienting catalytically important motifs. At a more global level, SH2 binding redirects the hinge motion of the N and C lobes and changes the conformational equilibrium of the activation loop. The complex network of subtle structural shifts that link the SH2 domain with the activation loop and the active site may be partially conserved with other SH2-domain containing kinases and therefore offer additional parameters for the design of conformation-specific inhibitors. 