Microorganisms accumulate molar concentrations of compatible solutes like ectoine to prevent proteins from denaturation. Direct structural or spectroscopic information on the mechanism and about the hydration shell around ectoine are scarce. We combined surface plasmon resonance (SPR), confocal Raman spectroscopy, molecular dynamics simulations, and density functional theory (DFT) calculations to study the local hydration shell around ectoine and its influence on the binding of a gene-S-protein (G5P) to a single-stranded DNA (dT(25)). Due to the very high hygroscopicity of ectoine, it was possible to analyze the highly stable hydration shell by confocal Raman spectroscopy. Corresponding molecular dynamics simulation results revealed a significant change of the water dielectric constant in the presence of a high molar ectoine concentration as compared to pure water. The SPR data showed that the amount of protein bound to DNA decreases in the presence of ectoine, and hence, the protein-DNA dissociation constant increases in a concentration-dependent manner. Concomitantly, the Raman spectra in terms of the amide I region revealed large changes in the protein secondary structure. Our results indicate that ectoine strongly affects the molecular recognition between the protein and the oligonudeotide, which has important consequences for osmotic regulation mechanisms.