A molecular dynamics calculation on aqueous solution of urea has been carried out using constant temperature technique. The total number of molecules was 216, one of which was urea and the temperature was set to 298.15 K and an experimental value was used for the density. For water–water interaction, the MCY (Matsuoka–Clementi–Yoshimine) potential was used, whereas a new potential function was determined for urea–water interaction from SCF LCAO calculations for more than 800 different dimeric configurations with an STO-3G basis set and subsequent multiparameter fitting of the MO results thus obtained to an appropriate functional form by a nonlinear optimization method. The molecular dynamics calculation has been carried out up to 64 000 time steps and from the final 40 000 time steps, thermodynamic quantities, structural and energetic distribution functions, and time-dependent properties were obtained. The original water structure in the vicinity of urea molecule is slightly changed energetically by incorporation of the urea molecule. However, this energy difference is insignificant for the whole system. Instead of the possibility to form strong hydrogen bonding as estimated from the potential function, it is found that urea molecule could enter into the water structure without any appreciable distortion. This fact was confirmed by the angular dependence of any distribution function around the urea molecule. The hydrophilic region does not show a large energetic stabilization between water molecules and the system is stabilized slightly by including urea–water interaction. In contrast to this, the energy for water molecules in the hydrophobic region (above and below the plane containing urea molecule) becomes lower than that of pure water, although this region is small and water molecules cannot form a strong hydrogen bond with urea. This fact reveals that the role of each functional region, which may be either hydrophobic or hydrophilic, is similar to that of alcohol in aqueous solution, although the whole hydration structure of urea molecule is somewhat different from that of alcohol. Reflecting strong interaction of urea–water, the diffusion coefficient for shell water molecules in the vicinity of urea (within 5 Å from urea molecule) becomes smaller by 10%. Moreover, the hydration structure around urea continues for a long time (16 ps), though the energetic relaxation time is very short.