DREAM (also known as K(+) channel interacting protein 3 and calsenilin) is a calcium binding protein and an active modulator of KV4 channels in neuronal cells as well as a novel Ca(2+)-regulated transcriptional modulator. DREAM has also been associated with the regulation of Alzheimer's disease through the prevention of presenilin-2 fragmentation. Many interactions of DREAM with its binding partners (Kv4, calmodulin, DNA, and drugs) have been shown to be dependent on calcium. Therefore, understanding the structural changes induced by binding of metals to DREAM is essential for elucidating the mechanism of signal transduction and biological activity of this protein. Here, we show that the fluorescence emission and excitation spectra of the calcium luminescent analogue, Tb(3+), are enhanced upon binding to the EF-hands of DREAM due to a mechanism of energy transfer between Trp and Tb(3+). We also observe that unlike Tb(3+)-bound calmodulin, the luminescence lifetime of terbium bound to DREAM decays as a complex multiexponential (τaverage ∼ 1.8 ms) that is sensitive to perturbation of the protein structure and drug (NS5806) binding. Using isothermal calorimetry, we have determined that Tb(3+) binds to at least three sites with high affinity (Kd = 1.8 μM in the presence of Ca(2+)) and displaces bound Ca(2+) through an entropically driven mechanism (ΔH ∼ 12 kcal mol(-1), and TΔS ∼ 22 kcal mol(-1)). Furthermore, the hydrophobic probe 1,8-ANS shows that Tb(3+), like Ca(2+), triggers the exposure of a hydrophobic surface on DREAM, which modulates ligand binding. Analogous to Ca(2+) binding, Tb(3+) binding also induces the dimerization of DREAM. Secondary structural analyses using far-UV circular dichroism and trapped ion mobility spectrometry-mass spectrometry reveal that replacement of Ca(2+) with Tb(3+) preserves the folding state with minimal changes to the overall structure of DREAM. These findings pave the way for further investigation of the metal binding properties of DREAM using lanthanides as well as the study of DREAM-protein complexes by lanthanide resonance energy transfer or nuclear magnetic resonance.