We have carried out 1 nanosecond (ns) Molecular Dynamics (MD) simulations of the drug Y3 (4-acetylamino-5-hydroxynaphthalene- 2, 7-disulfonic acid) complexed with catalytic domain of Avian sarcoma virus Integrase (ASV-IN), both in vacuum and in the presence of explicit solvent. Starting models were obtained on the basis of PDB co- ordinates (1A5X) of ASV-IN-Y3 complex. Mn(2+) cation was present in the active site. To neutralize the positive charge in the presence of explicit solvent, eight Cl(-)anions were added. Energy Minimization (EM) and MD simulations, for both the systems, were carried out using Sander's module of AMBER5.0 with all atom force field. We also carried out 1 ns MD simulation on two flexible loops--L1 (Gly54-Gln62) and L2 (Trp138-Met155) playing crucial role in interaction of IN with the drug, under differing environmental conditions (vacuum, aqueous and organic solvent methanol). Comparison of the conformational changes in the loops, monomer and dimer is presented in the paper. Our results showed that the conformation of the loop region was closest to crystallographic data in case of monomer and constrained loops in aqueous environment. However, the dimer in vacuum was more stable than monomer. The beta sheet structure of the monomer in aqueous environment was unstable. Latter also took long time for equilibration. The box formed by loops L1 and L2 from two sub units (IINA and INB) of the dimer satisfies prerequisites for ligand recognition site and seems to be the functional biological unit.