Mutations in p97, a major cytosolic AAA (ATPases associated with a variety of cellular activities) chaperone, cause inclusion body myopathy associated with Paget's disease of the bone and frontotemporal dementia (IBMPFD). IBMPFD mutants have single amino‐acid substitutions at the interface between the N‐terminal domain (N‐domain) and the adjacent AAA domain (D1), resulting in a reduced affinity for ADP. The structures of p97 N–D1 fragments bearing IBMPFD mutations adopt an atypical N‐domain conformation in the presence of Mg²⁺·ATPγS, which is reversible by ADP, showing for the first time the nucleotide‐dependent conformational change of the N‐domain. The transition from the ADP‐ to the ATPγS‐bound state is accompanied by a loop‐to‐helix conversion in the N–D1 linker and by an apparent re‐ordering in the N‐terminal region of p97. X‐ray scattering experiments suggest that wild‐type p97 subunits undergo a similar nucleotide‐dependent N‐domain conformational change. We propose that IBMPFD mutations alter the timing of the transition between nucleotide states by destabilizing the ADP‐bound form and consequently interfere with the interactions between the N‐domains and their substrates.