Horse liver alcohol dehydrogenase is a homodimer, the protomer having a coenzyme-binding domain and a catalytic domain. Using all available x-ray structures and 50 ns of molecular dynamics simulations, we investigated the mechanism of NAD+-induced domain closure. When the well-known loop at the domain interface was modeled to its conformation in the closed structure, the NAD+-induced domain closure from the open structure could be simulated with remarkable accuracy. Native interactions in the closed structure between Arg369, Arg47, His51, Ala317, Phe319, and NAD+ were seen to form at different stages during domain closure. Removal of the Arg369 side-chain charge resulted in the loss of the tendency to close, verifying that specific interactions do help drive the domains closed. Further simulations and a careful analysis of x-ray structures suggest that the loop prevents domain closure in the absence of NAD+, and a cooperative mechanism operates between the subunits for domain closure. This cooperative mechanism explains the role of the loop as a block to closure because in the absence of NAD+ it would prevent the occurrence of an unliganded closed subunit when the other subunit closes on NAD+. Simulations that started with one subunit open and one closed supported this.