Thermolysin (TLN) is a metalloprotease widely used for elaborating peptides of amino acid residues. Its enzyme activity is inhibited by the binding of dipeptide molecules. We here investigate specific interactions and binding free energies between TLN and two dipeptides by molecular simulations based on ab initio fragment molecular orbital and classical vibrational analysis methods. The results elucidate that binding free energies between TLN and dipeptides can explain experimentally observed inhibition of TLN activity by dipeptide binding, indicating the importance of entropic effect on the binding affinity between TLN and dipeptides.