Crystal structures are presented for the A197C mutant of Escherichia coli phosphate binding protein (PBP) and the same mutant labeled at Cys197 with N-[2-(1-maleimidyl)ethyl]-7-(diethylamino)coumarin-3-carboxamide (MDCC). Both proteins are complexed with inorganic phosphate. The latter molecule, MDCC-PBP, exhibits a large increase in fluorescence on binding inorganic phosphate. The resulting high-fluorescence state of the coumarin and the ability of this coumarin to monitor the conformational changes associated with inorganic phosphate binding are interpreted in terms of the specific interactions of MDCC with the protein. The structure helps to explain why this particular label gives a high-fluorescence state on binding inorganic phosphate, while several other related labels do not, and hence aids our general understanding of environmentally sensitive fluorescence probes on proteins.