This study combined calorimetric and NMR measurements with detailed atomistic molecular simulations of protein-ligand interactions to elucidate the molecular recognition mechanism that underpins ordering of the N-terminal MDM2 lid region upon binding of AM-7209, a small molecule ligand. This ligand-specific lid ordering is found to be driven by the shielding from solvent of a cluster of lid and ligand non-polar moieties in a manner reminiscent of the hydrophobic-collapse model of protein folding. Other lid stabilisation mechanisms, such as direct contacts between lid residue Val14 and AM-7209, or salt bridge formation between lid residue Glu23 and MDM2 residue Arg97, were shown to only play a secondary role. The computer simulations enabled identification of a single residue mutation at Ile19, that abrogates this ligand-induced protein disorder-order transition, and is associated with a concomitant loss of three orders of magnitude in affinity for the ligand. Our findings thus suggest that, in addition to loss-of-function mutations in the TP53 gene, mutations in MDM2's intrinsically disordered lid region have the potential to mediate resistance to some classes of therapeutic p53/MDM2 antagonists. More broadly, our results highlight the prominent role that IDRs can play in molecular recognition of small molecules, and the importance of accounting for the presence of IDRs in ligand optimisation efforts. Recent advances have enabled generation of sequenceto-ensemble representations for entire IDR proteomes. Given the high prevalence of IDRs, assessment of energy landscapes of IDRs flanking conventional structured protein regions through detailed atomistic simulations may offer a generalizable strategy to exploit cryptic binding sites for small molecules in therapeutic interventions.