Phytohormone abscisic acid (ABA) is essential for plant responses to biotic and abiotic stresses. Dimeric receptors are a class of ABA receptors that are important for various ABA responses. While extensive experimental and computational studies have investigated these receptors, it remains not fully understood how ABA leads to their activation and dissociation for interaction with downstream phosphatase. It also remains unknown how networks of water molecules present in the binding site affect ABA perception despite its critical role in protein-ligand binding. Here, we study the activation and the homodimeric association processes of PYL2 receptor as well as its heterodimeric association with the phosphatase HAB1 using molecular dynamics simulations. Free energy landscapes from ~223 μs simulations show that dimerization substantially constrains PYL2 conformational plasticity and stabilizes inactive state, resulting in lower ABA affinity. Using hydration site analysis to characterize receptor solvation thermodynamics, we show that the displacement and reorganization of water molecules upon ABA binding contribute to binding affinity via gain of entropy and enthalpy, respectively. The penalty for expelling water molecules into the bulk causes the free energy barrier to binding (~4-5 kcal/mol). Finally, we establish the thermodynamic model for competitive binding between homodimeric PYL2 association and heterodimeric PYL2-HAB1 association in the absence and presence of ABA. Our results suggest that the binding of ABA destabilizes PYL2 complex and further stabilizes PYL2-HAB1 association, thereby promoting PYL2 dissociation. Overall, this study explains several key aspects on activation of dimeric ABA receptors, which provide new avenues for selective regulation of these receptors.