Intercalation into DNA (insertion between a pair of base pairs) is a critical step in the function of many anticancer drugs. Despite its importance, a detailed mechanistic understanding of this process at the molecular level is lacking. We have constructed, using extensive atomistic computer simulations and umbrella sampling techniques, a free energy landscape for the intercalation of the anticancer drug daunomycin into a twelve base pair B-DNA. A similar free energy landscape has been constructed for a probable intermediate DNA minor groove-bound state. These allow a molecular level understanding of aspects of the thermodynamics, DNA structural changes, and kinetic pathways of the intercalation process. Key DNA structural changes involve opening the future intercalation site base pairs toward the minor groove (positive roll), followed by an increase in the rise, accompanied by hydrogen bonding changes of the minor groove waters. The calculated intercalation free energy change is -12.3 kcal/mol, in reasonable agreement with the experimental estimate -9.4 kcal/mol. The results point to a mechanism in which the drug first binds to the minor groove and then intercalates into the DNA in an activated process, which is found to be in general agreement with experimental kinetic results.