We present a computational study of polarizabilities and hyperpolarizabilities of organic molecules in aqueous solutions, focusing on solute–water interactions and the way they affect a molecule’s linear and non-linear electric response properties. We employ a polarizable quantum mechanics/molecular mechanics (QM/MM) computational model that treats the solute at the QM level while the solvent is treated classically using a force field that includes polarizable charges and dipoles, which dynamically respond to the solute’s quantum-mechanical electron density. Quantum confinement effects are also treated by means of a recently implemented method that endows solvent molecules with a parametric electron density, which exerts Pauli repulsion forces upon the solute. By applying the method to a set of aromatic molecules in solution we show that, for both polarizabilities and first hyperpolarizabilities, observed solution values are the result of a delicate balance between electrostatics, hydrogen-bonding, and non-electrostatic solute solvent interactions.