Traditional genome alignment methods consider sequence alignment as a variation of the string edit distance problem, and perform alignment by matching characters of the two sequences. They are often computationally expensive and unable to deal with low information regions. Furthermore, they lack a well-principled objective function to measure the performance of sets of parameters. Since genomic sequences carry genetic information, this article proposes that the information content of each nucleotide in a position should be considered in sequence alignment. An information-theoretic approach for pairwise genome local alignment, namely XMAligner, is presented. Instead of comparing sequences at the character level, XMAligner considers a pair of nucleotides from two sequences to be related if their mutual information in context is significant. The information content of nucleotides in sequences is measured by a lossless compression technique.