Phosphoinositides (PIs) are concentrated in specific subcellular membranes in order to recruit and regulate cytosolic proteins responsible for vesicular trafficking, cytoskeletal rearrangement, and eukaryotic cell growth, differentiation, and survival. Phox homology (PX) domains are found in proteins that are integral players in endocytic pathways. For example, Vam7p is targeted by its PX domain to phosphatidylinositol 3-phosphate [PtdIns(3)P] in the yeast vacuole, where it interacts with other SNARE proteins and GTPases of the vesicular membrane fusion machinery. Although several PX structures have been solved, the role of dynamics in their interactions with membrane lipids is unclear. Here, we present the first detailed characterization of the backbone dynamics of a PX domain, that of Vam7p, in the presence and absence of its ligand. The structure appears to tumble more rapidly in solution upon binding PtdIns(3)P, revealing a conformational change that includes adjustments in the flexible membrane insertion loop (MIL). The flexibilities of the MIL and domain termini are pronounced in both states, while the α1 and α2 helices are rigid. Dynamic effects are spread across the binding pocket, with PtdIns(3)P inducing altered mobility of different residues on multiple timescales, including a shift in the MIL to slower timescale motions. The bound state is more dynamic overall, particularly in the β-sheet lobe, which packs against the ligand's 3-phosphate. Thus, the induced dynamic and structural effects are transduced from the buried heart of the binding pocket in the helical lobe through the β-sheet lobe to the exposed surface of the bilayer-inserted protein.