In this work, ab initio CBS-QB3 procedures were used to study structure and stability of possible tautomers and rotamers of azulene-based uracil analogue (AZU) in the gas phase and in water. Similar to uracil (U), the di–keto form of the new system is the most stable structure relative to keto–enol and di-enol forms. The calculated barrier heights for proton transfer reactions are in the range of 26.1–41.9 kcal/mol, while the OH rotational energy barriers are less than 12 kcal/mol. The rotomerization process in azulene-based system is more difficult than in uracil. However, tautomerization illustrates the opposite trend. Zwitterion tautomers of AZU were also investigated. Calculations in water cause some reordering of the relative stability of azulene-based tautomers and affect the energy barriers of tautomerization.