An extended set of nanosecond-scale molecular dynamics simulations of DNA duplex sequences in explicit solvent interacting with the minor groove binding drug 4',6-diamidino-2-phenylindole (DAPI) are investigated for four different and sequence specific binding modes. Force fields for DAPI have been parametrized to properly reflect its internal nonplanarity. Sequences investigated include the binding modes observed experimentally, that is, (AATT) under bar in d(CGCGAATTCGCG)(2) and (ATTG) under bar in d(GGCCAATTGG)(2) and alternative shifted binding modes (ATTC) under bar and (AATT) under bar, respectively. In each case, stable MD simulations are obtained, well reproducing specific hydration patterns seen in the experiments. In contrast to the 2.4 Angstrom d(CGCGAATTCGCG)(2) crystal structure, the DAPI is nonplanar, consistent with its gas-phase geometry and the higher resolution crystal structure. The simulations also suggest that the DAPI molecule is able to adopt different conformational substates accompanied by specific hydration patterns that include long-residing waters. The MM-PBSA technology for estimating relative free energies was utilized. The most consistent free energy results were obtained with an approach that uses a single trajectory of the, DNA-DAPI complex to estimate all free energy terms. It is demonstrated that explicit inclusion of a subset of bound water molecules shifts the calculated relative binding free energies in favor of both crystallographically observed binding modes, underlining the importance of structured hydration.