Abietadiene synthase from Abies grandis (AgAS) is a model system for diterpene synthase activity, catalyzing class I (ionization-initiated) and class II (protonation-initiated) cyclization reactions. Reported here is the crystal structure of AgAS at 2.3 Å resolution and molecular dynamics simulations of that structure with and without active site ligands. AgAS has three domains (α, β, and γ). The class I active site is within the C-terminal α domain, and the class II active site is between the N-terminal γ and β domains. The domain organization resembles that of monofunctional diterpene synthases and is consistent with proposed evolutionary origins of terpene synthases. Molecular dynamics simulations were carried out to determine the effect of substrate binding on enzymatic structure. Although such studies of the class I active site do lead to an enclosed substrate-Mg2+ complex similar to that observed in crystal structures of related plant enzymes, it does not enforce a single substrate conformation consistent with the known product stereochemistry. Simulations of the class II active site were more informative, with observation of a well ordered external loop migration. This “loop-in” conformation not only limits solvent access but also greatly increases the number of conformational states accessible to the substrate while destabilizing the nonproductive substrate conformation present in the “loop-out” conformation. Moreover, these conformational changes at the class II active site drive the substrate toward the proposed transition state. Docked substrate complexes were further assessed with regard to the effects of site-directed mutations on class I and II activities.