We interpret plasma and magnetic field observations taken during the Galileo spacecraft Io flybys I0 in December 1995, I24 in October 1999, and I27 in February 2000, and we give predictions for a generic pass over Io's northern pole with a three-dimensional, two-fluid plasma model. We show that all previous field and plasma observations by the Galileo spacecraft can be explained without the assumption of an internal magnetic field of Io in contrast to claims by Kivelson et al. <1996a, 1996b> and Khurana et al. <1997>. We are also able to reproduce both the magnitude and the structure of the double-peak magnetic field signature of the I0 flyby. The origin of this structure can be attributed to diamagnetic and inertia currents. Observations by a polar flyby should answer Io's internal magnetic field question decisively. We also study the effect of different neutral atmosphere models on Io's electrodynamic interaction. Our analysis suggests that Io's atmosphere is longitudinally asymmetric with the scale height on the upstream side smaller than on the downstream side due to the drag force of the flowing plasma on Io's atmosphere. We also show how the Hall effect in Io's ionosphere generates rotated Alfv¿n wings. In addition, the high-energy electrons observed by Williams et al. <1996, 1999> and Frank and Paterson <1999> might play an important role for the formation of Io's downstream wake.