Molecular relational learning (MRL) seeks to understand the interaction behaviors between molecules, a pivotal task in domains such as drug discovery and materials science. Recently, extracting core substructures and modeling their interactions have emerged as mainstream approaches within machine learning-assisted methods. However, these methods still exhibit some limitations, such as insufficient consideration of molecular interactions or capturing substructures that include excessive noise, which hampers precise core substructure extraction.To address these challenges, we present an integrated dynamic framework called Iterative Substructure Extraction (ISE). ISE employs the Expectation-Maximization (EM) algorithm for MRL tasks, where the core substructures of interacting molecules are treated as latent variables and model parameters, respectively. Through iterative refinement, ISE gradually narrows the interactions from the entire molecular structures to just the core substructures.Moreover, to ensure the extracted substructures are concise and compact, we propose the Interactive Graph Information Bottleneck (IGIB) theory, which focuses on capturing the most influential yet minimal interactive substructures. In summary, our approach, guided by the IGIB theory, achieves precise substructure extraction within the ISE framework and is encapsulated in the IGIB-ISE}Extensive experiments validate the superiority of our model over state-of-the-art baselines across various tasks in terms of accuracy, generalizability, and interpretability.