DREAM (downstream regulatory element antagonist modulator) is a neuronal calcium sensor that has been shown to modulate gene expression as well as to be involved in numerous neuronal processes. In this report, we show that association of calcium-bound calmodulin (CaM) with DREAM is mediated by a short amphipathic amino acid sequence located between residues 29 and 44 on DREAM. The association of CaM with a peptide analogous to DREAM(29-44) or to full-length DREAM protein is calcium-dependent with a dissociation constant of 136 nM or 3.4 μM, respectively. Thermodynamic and kinetic studies show that the observed decrease in affinity for the native protein is due to electrostatic interactions between the basic N-terminus and an electronegative surface on DREAM. These results are further supported by circular dichroism, binding studies, and molecular dynamics simulations. Additionally, fluorescence anisotropy decay measurements show a rotational correlation time of 10.8 ns for a complex of CaM with a DREAM(29-44) peptide, supporting a wraparound semispherical model with 1:1 stoichiometry. Furthermore, the interaction between an IEDANS-labeled CaM construct with DREAM is best modeled as a heterotetramer that adopts an elongated conformation with a correlation time of 45 ns in the presence of Ca(2+). We also demonstrate that association of CaM with DREAM eliminates the nonspecific interaction of DREAM with the DRE double-stranded DNA sequence of the human prodynorphin gene. This work provides molecular insight into the CaM:DREAM complex and its potential role in modulation of gene expression.