Cell-cycle regulatory protein, CDK2 is active when bound to its complementary partner protein, CyclinA or E. Recent discovery of the Kip/Cip family of proteins has indicated that the activity of CDK2 is also regulated by a member protein, p27. Although, the mechanism of CDK2 inhibition by p27 binding is known from crystal structure, little is known about the mechanism of CDK2 reactivation. Here, we execute classical and accelerated molecular dynamics simulations of unphosphorylated- and phosphorylated-p27 bound CDK2/CyclinA to unravel the CDK2 reactivation mechanism at molecular-to-atomic detail. Results suggest that the phosphorylation of p27 Y88 residue (pY88-p27) first disrupts the p27/CDK2 hybrid β-sheet and subsequently ejects the p27 310 helix from CDK2 catalytic cleft. The unbinding of p27 from CDK2/CyclinA complex, thus, follows a two-step unfolding mechanism, where the 310 helix ejection constitutes the rate-limiting step. Interestingly, the unfolding of p27 leaves CDK2/CyclinA in an active state, where the prerequisite CDK2-CyclinA interfacial contacts were regained and ATP achieved its native position for smooth transfer of phosphate. Our findings match very well with NMR chemical shift data that indicated the flip-out of p27 310 helix from CDK2 pocket and kinetic experiments that exhibited significant kinase activity of CDK2 when saturated with pY88-p27.