Bleomycin (BLM) is a glycopeptide antibiotic produced by the fungus Streptomyces verticillus which is used clinically for anticancer therapy. It is most active as an iron complex. A detailed spectroscopic and theoretical study of the ferric form of the drug, Fe(III)BLM, and its activated form, ABLM, is reported. ABLM, which has been shown to be a ferric hydroperoxide complex, is the last detectable intermediate in the reaction cycle of BLM that leads to a DNA radical and subsequent cleavage. Both forms of the drug are low-spin Fe(III) complexes and were studied with electron paramagnetic resonance (EPR), magnetic circular dichroism (MCD), and absorption (ABS) spectroscopy. In addition, resonance Raman (rR) and circular dichroism (CD) spectra are reported for Fe(III)BLM. The g matrix was analyzed in detail, and Griffith's model for row-spin d(5) complexes was experimentally evaluated. A ligand field analysis of the d-d region of the optical spectra resulted in a complete determination of the ligand field parameters for both forms of the drug. Analysis of the optical and rR data led to assignment of the main ABS band at 386 nm in both Fe(III)BLM and ABLM as deprotonated amide-to-iron ligand-to-metal charge-transfer (LMCT) transitions. Revised vibrational assignments are proposed on the basis of B3LYP frequency calculations on models of Fe(III)BLM. On the basis of energetically optimized geometric models for Fe(III)BLM and ABLM the electronic structures of both forms were analyzed using density functional theory (DFT), ab initio Hartree-Fock, and INDO/S methods. Conjugation of the deprotonated amide and pyrimidine functionalities is not proposed to be a major factor in the BLM electronic structure. In agreement with experimental data the calculations show that the ligand fields of both Fe(III)BLM and ABLM are dominated by the deprotonated amide that also determines the orientation of the t(2g) hole, the orientation of the g matrix and Mossbauer quadrupole tensor. The main LMCT band was shown to be an amide pi -LMCT band. The calculations were extended to study the reactivity of the drug toward DNA. The possibilities of (a) heterolytic cleavage of the O-O bond in ABLM to give Fe(V)BLM = O and H2O, (b) homolytic cleavage to give Fe(IV)BLM = O and OH., and (c) direct attack of the hydroperoxide of ABLM on DNA to give Fe(IV)BLM = O, water, and a DNA radical were evaluated. Importantly, heterolytic cleavage is strongly suggested to be energetically unfavorable because it leads to a product which is best described as [Fe(IV) = O BLM'] with a high-energy hole localized on the deprotonated amide. Initial homolytic cleavage is also discarded on the basis of the specificity of the reaction; this leads to the new working hypothesis that ABLM chemistry proceeds by direct attack of the substrate C-H bond by the low-spin ferric hydroperoxide complex ABLM. The electronic structure contributions to such a reaction are discussed, and the relationship of ABLM and cytochrome P450 is addressed.