In the standard procedure for artificial transformation of E. coli by plasmid DNA, cellular competence for DNA uptake is developed by suspending the cells in ice-cold CaCl2 (50-100 mM). It is believed that CaCl2 helps DNA adsorption to the lipopolysaccharide (LPS) molecules on E. coli cell surface; however, the binding mechanism is mostly obscure. In this report, we present our findings of an in-depth study on in vitro interaction between plasmid DNA and E. coli LPS, using different techniques like absorption and circular dichroism spectroscopy, isothermal titration calorimetry, electron and atomic force microscopy, and so on. The results suggest that the Ca(II) ions, forming coordination complexes with the phosphates of DNA and LPS, facilitate the binding between them. The binding interaction appears to be cooperative, reversible, exothermic, and enthalpy-driven in nature. Binding of LPS causes a partial transition of DNA from B- to A-form. Finer study with the hydrolyzed products of LPS shows that only the core oligosaccharide domain of LPS is responsible for the interaction with DNA. Moreover, the biological significance of this interaction becomes evident from the observation that E. coli cells, from which the LPS have been leached out considerably, show higher efficiency of transformation, when transformed with plasmid-LPS complex rather than plasmid DNA alone.