To determine the constraints on interactions within the core of a folded protein, we have analyzed the binding of 91 different compounds to an internal cavity created in the interior of phage T4 lysozyme by site-directed mutagenesis [Eriksson et al. (1992a) Nature 355, 371-373]. The cavity is able to accommodate a variety of small, mainly nonpolar, ligands. Molecules which do not appear to bind include those that are very polar, those that are too large, and those that have appropriate volume and polarity but inappropriate shape. Calorimetric analysis of 16 of these ligands reveals that their free energies of binding are poorly correlated with their solvent-transfer free energies. In addition, their enthalpies of binding are much larger than expected on the basis of transfer of the ligands from an aqueous to a nonpolar liquid phase. The binding energetics were analyzed by dividing the reaction into three processes: desolvation, immobilization, and packing. This analysis indicates that all three processes contribute to binding specificity. For a subset of these ligands that are structurally related, however, packing interactions in the protein interior are well modeled by the interactions of the ligands with octanol.