The lac repressor-operator system is a model system for understanding protein-DNA interactions and allosteric mechanisms in gene regulation. Despite the wealth of biochemical data provided by extensive mutations of both repressor and operator, the specific recognition mechanism of the natural lac operators by lac repressor has remained elusive. Here we present the first high-resolution structure of a dimer of the DNA-binding domain of lac repressor bound to its natural operator 01. The global positioning of the dimer on the operator is dramatically asymmetric, which results in a different pattern of specific contacts between the two sites. Specific recognition is accomplished by a combination of elongation and twist by 48 degrees of the right lac subunit relative to the left one, significant rearrangement of many side chains as well as sequence-dependent deformability of the DNA. The set of recognition mechanisms involved in the lac repressor-operator system is unique among other protein-DNA complexes and presents a nice example of the adaptability that both proteins and DNA exhibit in the context of their mutual interaction.