Density functional theory (B3LYP) calculations of the hydration of trimethylamine-N-oxide (TMAO) and a surfactant dimethyldodecylamine-N-oxide (DDAO) are reported. Hydrogen-bonded complexes of DDAO with up to three water molecules and of TMAO with up to five water molecules are studied. Interactions of both TMAO and DDAO with water give rise to the binding energies that are much higher than that in the water dimer. A significant charge transfer from amine oxide to water is observed. Energies of water–water interactions increase in the presence of amine oxides. The hydration number of TMAO in the hydrogen bonded complexes is shown to be three. The energies of amine oxide–water interactions in the hydrogen bonded complexes have been analyzed using differential energetic parameters analogous to the parameters measured in calorimetric experiments.