Role of Magnesium ion is well substantiated in DNA structure and function though the appropriate nature of DNA magnesium interaction is still not fully established. We have analyzed available DNA crystal structures in presence of magnesium ion, which show the experimental evidences for various interaction modes between DNA molecule and magnesium ion. Two preferred modes are found: direct coordinating interaction between magnesium ion and electronegative DNA atoms, and the secondary mode of interaction via formation of hydrogen bonds. This qualitative data is further supported by ab initio quantum chemical calculations using restricted Hartree-Fock and Density Functional Theory. We have analyzed the energies and partial charges of different DNA fragments and hydrated magnesium ions, following restrained and unrestrained geometry optimizations along the reaction coordinate. The restrained optimizations for the systems generally show two energy minima separated by an energy barrier, the height ranges from about 5 to 15 kcal/mol, which is in agreement with experimental observations. All these analyses suggest that both modes of interactions occur almost with equal probability, although water mediated secondary mode of interaction is preferred in most cases, which was so far neglected.