We consider the most general Dunkl shift operator $L$ with the following properties: (i) $L$ is of first order in the shift operator and involves reflections; (ii) $L$ preserves the space of polynomials of a given degree; (iii) $L$ is potentially self-adjoint. We show that under these conditions, the operator $L$ has eigenfunctions which coincide with the Bannai-Ito polynomials. We construct a polynomial basis which is lower-triangular and two-diagonal with respect to the action of the operator $L$. This allows to express the BI polynomials explicitly. We also present an anti-commutator AW(3) algebra corresponding to this operator. From the representations of this algebra, we derive the structure and recurrence relations of the BI polynomials. We introduce new orthogonal polynomials - referred to as the complementary BI polynomials - as an alternative $q \to -1$ limit of the Askey-Wilson polynomials. These complementary BI polynomials lead to a new explicit expression for the BI polynomials in terms of the ordinary Wilson polynomials.

35 pages, to be published in Adv.Math