Ubiquitin-like modifications are macromolecular chemistry for which our understanding of the enzymatic mechanisms is lacking. Most E3 ligases in ubiquitin-like modifications do not directly participate in chemistry but are thought to confer allosteric effects; however, the nature of the allosteric effects has been elusive. Recent molecular dynamics simulations suggested that an E3 binding enhances the population of the conformational states of the E2·SUMO thioester that favor reactions. In this study, we conducted the first temperature-dependent enzyme kinetic analysis to investigate the role of an E3 on activation entropy and enthalpy. The small ubiquitin-like modifier (SUMO) E3, RanBP2, confers unusually large, favorable activation entropy to lower the activation energy of the reaction. Mutants of RanBP2, designed to alter the flexibilities of the E2·SUMO thioester, showed a direct correlation of their favorable entropic effects with their ability to restrict the conformational flexibility of the E2·SUMO thioester. While the more favorable activation entropy is consistent with the previously suggested role of E3 in conformational selection, the large positive entropy suggests a significant role of solvent in catalysis. Indeed, molecular dynamics simulations in explicit water revealed that the more stable E2·SUMO thioester upon E3 binding results in stabilization of a large number of bound water molecules. Liberating such structured water at the transition state can result in large favorable activation entropy but unfavorable activation enthalpy. The entropy-driven mechanism of the E3 is consistent with the lack of structural conservation among E3s despite their similar functions. This study also illustrates how proteins that bind both SUMO and E2 can function as E3s and how intrinsically unstructured proteins can enhance macromolecular chemistry in addition to their known advantages in protein--protein interactions.