The low affinity of peptide nucleic acid (PNA) to hybridize with DNA in the presence of a mismatch endows PNA with a high degree of discriminatory capacity that has been exploited in therapeutics for the selective inhibition of the expression of point-mutated genes. To obtain a structural basis for this intriguing property, molecular dynamics simulations are carried out on PNA-DNA duplexes formed at the Ki-ras proto-oncogene, comprising the point-mutated (GAT), and the corresponding wild-type (GGT) codon 12. The designed PNA forms an A...C mismatch with the wild-type sequence and a perfect A...T pair with the point mutated sequence. Results show that large movements in the pyrimidine base of the A...C mismatch cause loss of stacking, especially with its penultimate base, concomitant with a variable mismatch hydrogen bond, including its occasional absence. These, in turn, bring about dynamic water interactions in the vicinity of the mismatch. Enthalpy loss and the disproportionate entropy gain associated with these are implicated as the factors contributing to the increase in free energy and diminished stability of PNA-DNA duplex with the A...C mismatch. Absence of these in the isosequential DNA duplex, notwithstanding the A...C mismatch, is attributed to the differences in topology of PNA·DNA vis-à-vis DNA duplexes. It is speculated that similar effects might be responsible for the reduced stability observed in PNA·DNA duplexes containing other base pair mismatches, and also in mismatch containing PNA·RNA duplexes. © 2005 FEBS.