A computational study on iodine, iodide and polyiodide is carried out using different density functional methods and basis sets. All electron basis sets with hybrid and generalized-gradient approximation (GGA) functionals overestimate the bond distance and underestimate the vibrational frequency and formation energy of the iodine molecule. The local density approximation functionals with an effective core potential (ECP) basis set results in a very good bond distance but overestimates the vibrational frequency and formation energy. Hybrid functionals with ECPs give relatively good values for bond distance and vibrational frequency but hugely underestimate the formation energy. Only GGA functionals with ECP estimate all three parameters very well. The structural and vibrational properties and energetics (electron affinity and formation energy) of I, I−, I2, I2− and I3− are in good agreement with the corresponding experimental values for PW91 and ECP calculations. However, the basis set with diffuse function (along with polarized function) can describe the iodide and polyiodide better. The spin–orbit contribution needs to be included for a correct description of the energetics.