Calicheamicin gamma(1)(I) (CLM gamma(1)(I)) is one of the diynene antitumor antibiotics known to show comparatively high sequence selectivity in its cleavages of DNA. The origins of this discrimination and the proposed role of the side-chain aryl iodide interaction with the helix are addressed. While drug activation with thiols is complex, the rate-limiting rearrangement of the dihydrothiophene intermediate in this process is sufficiently slow for it to serve as the species responsible for the sequence selection common to all reaction pathways leading to DNA cleavage. Internal competition experiments between a TCCT . AGGA sequence, known to be favorable for selective cutting, and a series of other cleavage sites of equal size have been conducted with the dihydrothiophene. Although the extents of reaction differ at the variable four-base pair cassette, the rates of reaction are identical within experimental error. These results indicate that equilibrium binding of the dihydrothiophene is achieved before substantial strand scission has taken place. Therefore, kinetic effects owing, for example, to steric compression to enhance the rate of Bergman cyclization at certain sites do not occur. Sequence selection is governed by thermodynamic effects favoring binding of the dihydrothiophene at these sequences. Free energy differences relative to the TCCT site can, therefore, be calculated. Knowing this, inosine (I) substitutions for guanosine have been made within the complementary AGGA to give AIGA and AGIA to examine the effect of replacing the 2-amino group of guanosine with the hydrogen of inosine. Analogous competition experiments permit the thermodynamic advantage conferred by aryl iodide interaction with the 5’-guanosine to be estimated as approximately 1 kcal/mol. The magnitude of this stabilization was compared to the total binding of CLM gamma(1)(I) and CLM epsilon at a TCCT . AGGA sequence by isothermal titration calorimetry and quantitative hydroxyl radical footprint titration, respectively, to give an overall view of the energetics of calicheamicin binding to DNA and the role played by the side-chain aryl iodide.