The dissociation of I2 molecules at the optical axis of a supersonic chemical oxygen-iodine laser (COIL) was studied via detailed measurements and three dimensional computational fluid dynamics calculations. Comparing the measurements and the calculations enabled critical examination of previously proposed dissociation mechanisms and suggestion of a mechanism consistent with the experimental and theoretical results. The gain, I 2 dissociation fraction and temperature at the optical axis, calculated using Heidner's model (R.F. Heidner III et al., J. Phys. Chem. 87,2348 (1983)), are much lower than those measured experimentally. Agreement with the experimental results was reached by using Heidner's model supplemented by Azyazov-Heaven's model (V.N. Azyazov and M.C. Heaven, AIAA J. 44, 1593 (2006)) where I2(A') and vibrationally excited O2(a 1Δ) are significant dissociation intermediates.