Differential interactions among nonpolar moieties at protein/ligand interfaces, and of these nonpolar groups with water, collectively termed hydrophobic interactions, are widely believed to make important energetic contributions to the stability of protein/ligand complexes. Quantitative estimates of hydrophobic interactions, and an evaluation of their structural basis, are essential for obtaining structure-based predictions of the free energies of binding for the purpose of drug design. Two largely nonpolar, immunosuppressive agents, FK506 and rapamycin, each bind with high affinity to a common hydrophobic pocket on a small peptidylproline cis-trans isomerase known as FK506 binding protein (FKBP-12) and inhibit its activity. In an effort to elucidate the structural features of these ligands responsible for the observed energetics, we have undertaken an investigation of the thermodynamics of binding of FK506 and rapamycin to FKBP-12. Enthalpies of binding have been determined by high-precision titration calorimetry over a range of temperature, allowing estimates of heat capacity changes. By analyzing the distribution of changes in solvent-accessible surface area upon binding of FK506 to FKBP-12 from crystallographic data, it is found that 99% of the net surface buried upon binding involves nonpolar groups. This leads to a heat capacity change of FK506 binding, normalized to the amount of nonpolar surface, of -0.40 +/- 0.02 cal.K-1.mol-1.A-2 (1 cal = 4.18 J), a value similar to that obtained for the aqueous dissolution of hydrophobic substances. Our observations are discussed in view of the general nature of hydrophobic interaction processes.