A new algorithm relying on finite integration is presented that solves the equations of continuum electrostatics for truncated (and possibly reaction-field corrected) solute-solvent and solvent-solvent interactions under either nonperiodic or periodic boundary conditions. After testing and validation by comparison with existing methods, the algorithm is applied to investigate the effect of cut-off truncation and artificial periodicity in explicit-solvent simulations of ionic solvation and ion-ion interactions. Both cut-off truncation and artificial periodicity significantly alter the polarization around a spherical ion and thus, its solvation free energy. The nature and magnitude of the two perturbations are analyzed in details, and correction terms are proposed for both effects. Cut-off truncation is also shown to induce strong alterations in the potential of mean force for ion-ion interaction. These observations help to rationalize artifacts previously observed in explicit-solvent simulations, namely spurious features in the radial distribution functions close to the cut-off distance and alterations in the relative stabilities of contact, solvent-separated and free ion pairs. (C) 2003 American Institute of Physics.