The osmolyte molecule trimethylamine-N-oxide (TMAO) stabilizes the structure of proteins. As functional proteins are generally found in aqueous solutions, an important aspect of this stabilization is the interaction of TMAO with water. Here, we review, using vibrational spectroscopy and molecular dynamics simulations, recent studies on the structure and dynamics of TMAO with its surrounding water molecules. This article ends with an outlook on the open questions on TMAO–protein and TMAO–urea interactions in aqueous environments.