Ligands which are able to recognize DNA sequence specifically are of fundamental interest as transcription controlling drugs. Recently a polyamide ligand was developed (ImHpPyPy-beta-Dp) which differentiates in a dimeric arrangement between all four possible base pair steps in the minor groove. This is a landmark for the design of DNA binding drugs because it was believed that such a recognition could only be possible in the major groove of DNA. Although the OH groups of the hydroxypyrrole (Hp) moieties of the ligands are responsible for this sequence discrimination, experiments showed that this OH group also reduces the absolute binding constant. We performed a free energy calculation by means of thermodynamic integration in order to find out the influence of this single hydroxyl on DNA binding. In our simulation, we found that the hydroxyl group reduces binding by about 1.3 kcal/mol, which is in excellent agreement with the experimentally determined value of 1.2 kcal/mol. In further MD simulations, the structural reasons for this reduction was estimated. The results of these simulations qualitatively agree with the X-ray structures, but in contrast, in the simulations both (ImHpPyPy-beta-Dp and ImPyPyPy-beta-Dp) ligand-DNA (d(CCAGTACTGG)(2)) complexes exhibit only slight structural differences. This is consistent with a recently published second pair of similar polyamide DNA crystal structures. Thus, we believe that the explanations resulting from the X-ray structures must be modified. We attribute the large structural differences between the two polyamide DNA complexes to a buffer molecule which binds only in the case of the ImHpPyPy-beta-Dp-DNA complex at the region of interest. We propose that the differential hydration of both ligands in the unbound state is responsible for the reduction of the binding constant. Additionally, we suggest an indirect readout of DNA, because of a lengthening of the Watson-Crick base pairs, which possibly contributes to the differentiation between T.A, A.T from G.C, C.G base pairs.