Several mechanistically unrelated enzymes utilize the binding energy of their substrate's nonreacting phosphoryl group to accelerate catalysis. Evidence for the involvement of the phosphodianion in transition state formation has come from reactions of the substrate in pieces, in which reaction of a truncated substrate lacking its phosphorylmethyl group is activated by inorganic phosphite. What has remained unknown until now is how the phosphodianion group influences the reaction energetics at different points along the reaction coordinate. 1-Deoxy-d-xylulose-5-phosphate (DXP) reductoisomerase (DXR), which catalyzes the isomerization of DXP to 2-C-methyl-d-erythrose 4-phosphate (MEsP) and subsequent NADPH-dependent reduction, presents a unique opportunity to address this concern. Previously, we have reported the effect of covalently linked phosphate on the energetics of DXP turnover. Through the use of chemically synthesized MEsP and its phosphate-truncated analogue, 2-C-methyl-d-glyceraldehyde, the current study revealed a loss of 6.1 kcal/mol of kinetic barrier stabilization upon truncation, of which 4.4 kcal/mol was regained in the presence of phosphite dianion. The activating effect of phosphite was accompanied by apparent tightening of its interactions within the active site at the intermediate stage of the reaction, suggesting a role of the phosphodianion in disfavoring intermediate release and in modulation of the on-enzyme isomerization equilibrium. The results of kinetic isotope effect and structural studies indicate rate limitation by physical steps when the covalent linkage is severed. These striking differences in the energetics of the natural reaction and the reactions in pieces provide a deeper insight into the contribution of enzyme-phosphodianion interactions to the reaction coordinate.