The Sar1 GTPase initiates Coat Protein II (COPII)-mediated protein transport by generating membrane curvature at subdomains on the Endoplasmic Reticulum, where it is activated by the guanine nucleotide exchange factor (GEF) Sec12. Crystal structures of GDP- and GTP-bound forms of Sar1 suggest that it undergoes a conformational switch in which GTP binding enhances the exposure of an amino-terminal amphipathic helix necessary for efficient membrane penetration. However, key residues in the amino-terminus were not resolved in crystal structures, and experimental studies have suggested that the amino-terminus of Sar1 is solvent-exposed in the absence of membrane, even in the GDP-bound state. Therefore, the molecular mechanism by which GTP binding activates the membrane remodeling activity of Sar1 remains unclear. Using atomistic molecular dynamics simulations, we compare the membrane binding and curvature generation activities of Sar1 in its GDP- and GTP-bound states. We show that in the GTP-bound state, Sar1 inserts into the membrane with its complete (residues 1-23) amphipathic amino-terminal helix, while Sar1-GDP binds to the membrane only through its first 12 residues. Such differential membrane binding modes translate into significant differences in the protein volume inserted into the membrane. As a result, Sar1-GTP generates positive membrane curvature 10-20 times higher than Sar1-GDP. Dimerization of the GTP-bound form of Sar1 further amplifies curvature generation. Taken together, our results present a detailed molecular mechanism for how the nucleotide-bound state of Sar1 regulates its membrane binding and remodeling activities in a concentration dependent manner, paving the way toward a better understanding COPII-mediated membrane transport.