High sequence selectivity in DNA-protein interactions was analyzed by measuring discrimination by Eco RI endonuclease between the recognition site GAATTC and systematically altered DNA sites. Base analogue substitutions that preserve the sequence-dependent conformational motif of the GAATTC site permit deletion of single sites of protein-base contact at a cost of +1 to +2 kcal/mol. However, the introduction of any one incorrect natural base pair costs +6 to +13 kcal/mol in transition state interaction energy, the resultant of the following interdependent factors: deletion of one or two hydrogen bonds between the protein and a purine base; unfavourable steric apposition between a group on the protein and an incorrectly placed functional group on a base; disruption of a pyrimidine contact with the protein; loss of some crucial interactions between protein and DNA phosphates; and an increased energetic cost of attaining the required DNA conformation in the transition state complex. Eco RI endonuclease thus achieves stringent discrimination by both "direct readout" (protein-base contracts) and "indirect readout" (protein-phosphate contacts and DNA conformation) of the DNA sequence.