The structure and dynamics of the fatty acid binding cavity in I-FABP (rat intestinal fatty acid binding protein) were analyzed. In the crystal structure of apo I-FABP, the probe occupied cavity volume and surface are 539 ± 8 Å3 and 428 Å2, respectively (1.4 Å probe). A total of 31 residues contact the cavity with their side chains. The side-chain cavity surface is partitioned according to the residue type as follows: 36–39% hydrophobic, 21–25% hydrophilic, and 37–43% neutral or ambivalent. Thus, the cavity surface is neither like a typical protein interior core, nor is like a typical protein external surface. All hydrophilic residues that contact the cavity—with the exception of Asp74—are clustered on the one side of the cavity. The cavity appears to expand its hydrophobic surface upon fatty acid binding on the side opposite to this hydrophilic patch. In holo I-FABP the fatty acid chain interactions with the hydrophilic side chains are mediated by water molecules. Molecular dynamics (MD) simulation of fully solvated apo I-FABP showed global conformational changes of I-FABP, which resulted in a large, but seemingly transient, exposure of the cavity to the external solvent. The packing density of the side chains lining the cavity, studied by Voronoi volumes, showed the presence of two distinctive small hydrophobic cores. The MD simulation predicts significant structural perturbations of the cavity on the subnanosecond time scale, which are capable of facilitating exchange of I-FABP internal water.