In this work, the discrete λ variant of the Gibbs sampler-based λ-dynamics (d-GSλD) method is developed to enable multiple functional group perturbations to be investigated at one or more sites of substitution off a common ligand core. The theoretical framework and special considerations for constructing discrete λ states for multisite d-GSλD are presented. The precision and accuracy of the d-GSλD method is evaluated with three test cases of increasing complexity. Specifically, methyl → methyl symmetric perturbations in water, 1,4-benzene hydration free energies and protein-ligand binding affinities for an example HIV-1 reverse transcriptase inhibitor series are computed with d-GSλD. Complementary MSλD calculations were also performed to compare with d-GSλD's performance. Excellent agreement between d-GSλD and MSλD is observed, with mean unsigned errors of 0.12 and 0.22 kcal/mol for computed hydration and binding free energy test cases, respectively. Good agreement with experiment is also observed, with errors of 0.5-0.7 kcal/mol. These findings support the applicability of the d-GSλD free energy method for a variety of molecular design problems, including structure-based drug design. Finally, a discussion of d-GSλD versus MSλD approaches is presented to compare and contrast features of both methods.