The mode of I–You is the mode of encounter or relation. We can enter into encounter with nature (both plant and animal), with other human beings, and with spiritual beings (such as God). Since this mode is not quite as simple to grasp as experience, it is best to break it down into its component characteristics, and to treat each separately: The most important aspect of encounter is that it requires us to be active participants rather than objective observers. We must enter into encounter with our entire being, and allow ourselves to be changed by it. Encounter, Buber tells us, is a moment of reciprocity, in which both the I and the You are transformed. This is why he calls relation dialogical, or conversational: much like a conversation or dialogue, encounter takes place between the two participants rather than inside one or the other, and it involves calling out toward a You and expecting a response. Experience, on the other hand, takes place entirely inside the I. The I observes, the I analyzes, all inside its own head. When the I of experience says "It", it is not seeking an answer from its object.

The notion of mutual transformation between the I and the You in the moment of encounter is most easily understood when we consider an encounter between an artist and his or her creation (Buber considers this a paradigm example of encounter). It is easy to see how both the art and the artist are changed by the creative process: the art acquires form and comes into being; the artist goes through various psychological, emotional, and mental transformations as a result of the process.

The second key feature of encounter is that, whereas in experience the I sees the It merely as the sum of its qualities, in encounter the I sees the You as much more than that sum. One encounters the whole You in the full manifold of its existence. Instead of viewing the You as a point in space and time, the I of encounter views all of space and time, the entire universe, through the You. In a sense, then, the You becomes the Universe for the encountering I.

Part of what enables the I to approach the You in this way (i.e. in its entirety of being) is the fact that relation is immediate or unmediated. We enter encounter without any relevant concepts, any prior knowledge, any greed, desires, or anticipation of what the You will be like. There us nothing mental separating the I from the You.

Encounter is also what Buber calls "pure present". Encounter is where the present takes place, whereas experience deals only with past. Presumably, this is because in encounter both the You and the I are removed from space and time. Seen apart from the flow of time, the You becomes enduring, eternal, and our relation with the You can occupy the present without continually falling into the past. In experience, on the other hand, we see the object as a point in time, and since every moment in time is always ending, we are never really in the present so long as we are in the realm of experience.

Nevertheless, though encounter is pure present, it is always necessarily fleeting. Any You, except the eternal You (God), will inevitably degenerate back into an It as soon as we become aware of the encounter, and begin to reflect on it.