In this and the accompanying paper we give a full account of results in earlier reports [Liu, Q.; et al. Nature 1993, 364, 427. Potter, E. D.; et al. Chem. Phys. Lett. 1992, 200, 605] on the experimental and theoretical studies of the femtosecond to picosecond dynamics of dissociation, recombination, and coherence of iodine in large argon clusters. Using different size distributions of I-2 . Ar-n(($) over bar n similar to 8-40), in a molecular beam, and tuning the wavelength of the pump and probe laser beams, the reaction dynamics over a wide range of energies, states, and reaction coordinates are examined. Both A-state direct dissociation and B-state predissociation are studied, covering a pump wavelength range of 460-700 nm. The probe wavelength was tuned from 280 to 350 nm to resolve the motion and relaxation of iodine at different internuclear separations on different states of recombination. From these systematic studies of the ultrafast dynamics, the microscopic picture of solvation is established with the following concepts : First, the initial occurrence of caging in large clusters involves the coherent recombination of the atoms; the bond re-forms in the solvent structure as the wave packet bounces back from the solvent shell. This femtosecond caging, which has not been observed previously, reveals the role of the solvent at early times. Second, incoherent, diffusive caging occurs on a longer time scale, and it is this caging process that involves physical movement of the solvent. Third, the entire process of caging depends on the time scale of bond breakage, as evidenced by the contrast between the dynamics following excitation onto the A (femtosecond dissociation) and B (picosecond predissociation) states. : First, the initial occurrence of caging in large clusters involves the coherent recombination of the atoms; the bond re-forms in the solvent structure as the wave packet bounces back from the solvent shell. This femtosecond caging, which has not been observed previously, reveals the role of the solvent at early times. Second, incoherent, diffusive caging occurs on a longer time scale, and it is this caging process that involves physical movement of the solvent. Third, the entire process of caging depends on the time scale of bond breakage, as evidenced by the contrast between the dynamics following excitation onto the A (femtosecond dissociation) and B (picosecond predissociation) states.