The declining effectiveness of current antibiotics due to the emergence of resistant bacterial strains dictates a pressing need for novel classes of antimicrobial therapies, preferably against molecular sites other than those in which resistance mutations have developed. Dihydropteroate synthase (DHPS) catalyzes a crucial step in the bacterial pathway of folic acid synthesis, a pathway that is absent in higher vertebrates. As the target of the sulfonamide class of drugs that were highly effective until resistance mutations arose, DHPS is known to be a valuable bacterial Achilles heel that is being further exploited for antibiotic development. Here, we report the discovery of the first known allosteric inhibitor of DHPS. NMR and crystallographic studies reveal that it engages a previously unknown binding site at the dimer interface. Kinetic data show that this inhibitor does not prevent substrate binding but rather exerts its effect at a later step in the catalytic cycle. Molecular dynamics simulations and quasi-harmonic analyses suggest that the effect of inhibitor binding is transmitted from the dimer interface to the active-site loops that are known to assume an obligatory ordered substructure during catalysis. Together with the kinetics results, these structural and dynamics data suggest an inhibitory mechanism in which binding at the dimer interface impacts loop movements that are required for product release. Our results potentially provide a novel target site for the development of new antibiotics.