We have developed the CANDOCK algorithm around a new protocol for hierarchical docking with iterative dynamics during fragment reconstruction. The docking protocol is based on two guiding principles: (i) binding sites possess regions of both very high and very low structural stability and (ii) small protein motions are generally sufficient to predict the correct binding mode of protein-ligand interactions . The hierarchical nature of this method is derived from an 'atoms to fragments,' 'fragments to ligands' approach that generates all chemically relevant poses given the ligand and surrounding protein binding site. The expectation is that, regardless of whether we begin with a holo or apo protein structure, at least one or a few fragments derived from a flexible ligand will bind to a structurally stable region of the protein. Following identification of such a binding mode, subtle conformational changes necessary for reconstructing the ligand using these fragments as seeds will be captured by molecular mechanics energy minimization. We show that CANDOCK can reproduce the binding mode of ligands in holo proteins and rank the activity of these ligands using a knowledge-based forcefield.