Oligonucleotide-based DNA microarrays are becoming increasingly useful for the analysis of gene expression and single nucleotide polymorphisms. Here we report a systematic study of the sensitivity, specificity and dynamic range of microarray signals and their dependence on the labeling and hybridization conditions as well as on the length, concentration, attachment moiety and purity of the oligonucleotides. Both a controlled set of in vitro synthesized transcripts and RNAs from biological samples were used in these experiments. An algorithm is presented that allows the efficient selection of oligonucleotides able to discriminate a single nucleotide mismatch. Critical parameters for various applications are discussed based on statistical analysis of the results. These data will facilitate the design and standardization of custom-made microarrays applicable to gene expression profiling and sequencing analyses.