Epirubicin (EPI), an anthracycline antitumour antibiotic, is a known intercalating and DNA damaging agent. Here, we study the molecular interaction of EPI with histones and other cellular targets. EPI binding with histone core protein was predicted with spectroscopic and computational techniques. The molecular distance r, between donor (histone H3) and acceptor (EPI) was estimated using Förster's theory of non-radiation energy transfer and the detailed binding phenomenon is expounded. Interestingly, the concentration dependent reduction in the acetylated states of histone H3 K9/K14 was observed suggesting more repressed chromatin state on EPI treatment. Its binding site near N-terminal lysines is further characterized by thermodynamic determinants and molecular docking studies. Specific DNA binding and inhibition of transcription factor (Tf)-DNA complex formation implicates EPI induced transcriptional inhibition. EPI also showed significant cell cycle arrest in drug treated cells. Chromatin fragmentation and loss of membrane integrity in EPI treated cells is suggestive of their commitment to cell death. This study provides an analysis of nucleosome dynamics during EPI treatment and provides a novel insight into its action.