Protein–polymer conjugation is a widely used technique to develop protein therapeutics with improved pharmacokinetic properties as prolonged half-life, higher stability, water solubility, lower immunogenicity, and antigenicity. Combining biochemical methods, small angle scattering (SAXS/SANS), and neutron spin–echo spectroscopy, here we examine the impact of PEGylation (i.e., the covalent conjugation with poly­(ethylene glycol) or PEG) on structure and internal domain dynamics of phosphoglycerate kinase (PGK) to elucidate the reason for reduced activity that is connected to PEGylation. PGK is a protein with a hinge motion between the two main domains that is directly related to function. We find that secondary structure and ligand access to the binding sites are not affected. The ligand induced cleft closing is unchanged. We observe an additional internal motion between covalent bonded PEG and the protein compatible with Brownian motion of PGK in a harmonic potential. Entropic interaction with the full PEG chain leads to a force constant of about 8 pN/nm independent of PEG chain length. This additional force preserves protein structure and has negligible effects on the functional domain dynamics of the protein. PEGylation seems to reduce activity just by acting as a local crowder for the ligands. The newly identified interaction mechanism might open possibilities to improve rational design of protein–polymer conjugates.