jats:titleAbstract</jats:title> jats:pWe study a truncated accretion disk using a well-resolved, semi-global magnetohydrodynamic simulation that is evolved for many dynamical times (6096 inner disk orbits). The spectral properties of hard-state black hole binary systems and low-luminosity active galactic nuclei are regularly attributed to truncated accretion disks, but a detailed understanding of the flow dynamics is lacking. In these systems the truncation is expected to arise through thermal instability driven by sharp changes in the radiative efficiency. We emulate this behavior using a simple bistable cooling function with efficient and inefficient branches. The accretion flow takes on an arrangement where a “transition zone” exists in between hot gas in the innermost regions and a cold, Shakura & Sunyaev thin disk at larger radii. The thin disk is embedded in an atmosphere of hot gas that is fed by a gentle outflow originating from the transition zone. Despite the presence of hot gas in the inner disk, accretion is efficient. Our analysis focuses on the details of the angular momentum transport, energetics, and magnetic field properties. We find that the magnetic dynamo is suppressed in the hot, truncated inner region of the disk which lowers the effective jats:italicα</jats:italic>-parameter by 65%.</jats:p>