Intrinsically disordered regions in proteins often function as binding motifs in protein-protein interactions. The mechanistic aspects and molecular details of such coupled binding and folding reactions, which involve formation of multiple noncovalent bonds, have been broadly studied theoretically, but experimental data are scarce. Here, using a combination of protein semisynthesis to incorporate phosphorylated amino acids, backbone amide-to-ester modifications, side chain substitutions, and binding kinetics, we examined the interaction between the intrinsically disordered motif of amyloid precursor protein (APP) and the phosphotyrosine binding (PTB) domain of Mint2. We show that the interaction is regulated by a self-inhibitory segment of the PTB domain previously termed ARM. The helical ARM linker decreases the association rate constant 30-fold through a fast pre-equilibrium between an open and a closed state. Extensive side chain substitutions combined with kinetic experiments demonstrate that the rate-limiting transition state for the binding reaction is governed by native and non-native hydrophobic interactions and hydrogen bonds. Hydrophobic interactions were found to be particularly important during crossing of the transition state barrier. Furthermore, linear free energy relationships show that the overall coupled binding and folding reaction involves cooperative formation of interactions with roughly 30% native contacts formed at the transition state. Our data support an emerging picture of coupled binding and folding reactions following overall chemical principles similar to those of folding of globular protein domains but with greater malleability of ground and transition states.