The paper presents the results of iodine vapour dissociation measurements in a high voltage, nanosecond pulse duration, repetitively pulsed discharge, used as an auxiliary (‘side’) discharge in an electric discharge excited oxygen–iodine laser. The side discharge, sustained in a high-pressure iodine vapour/helium mixture remained stable in the entire range of experimental conditions. Iodine dissociation fraction generated in the side discharge and measured in the laser cavity is up to 50%. However, the experiments showed that additional iodine dissociation generated in the side discharge only moderately increases laser gain, by 10–15%. Parametric gain optimization by varying main discharge pressure, O2 and NO fractions in the flow, I2 flow rate, pulsed discharge frequency and sustainer discharge power, with the side discharge in operation produces gain up to 0.08% cm−1. Two parameters that critically affect gain are the energy loading per molecule in the discharge and the NO flow rate controlling the O atom concentration in the flow. In particular, operation at the main discharge pressure of 60 Torr results in significantly higher gain than at 100 Torr, 0.080% cm−1 versus 0.043% cm−1, due to higher discharge energy loading per molecule at the lower pressure. Laser output power measured at the gain optimized conditions is 1.4 W.