The thermodynamics of hydration of biomolecules is experimentally studied in the beta-cyclodextrin (beta-CD), which contains water molecules in a range of configurations and has been proposed as a model system for complex biomolecules. The thermal measurements point to the role of a structural transition from the hydrated beta-CD (phase I) to a "dehydrated" form (phase IT). We show that dehydration in phase I is assisted by a "compensation mechanism" for which beta-CD contributes a constant amount of energy for each H2O mole. Despite the presence of different types of H2O’s, water losses in phase I:are accurately described in terms of this energy and the isosteric molar enthalpy of dehydration Moreover, in going from the fully hydrated to the fully dehydrated form, the contribution of beta-CD to dehydration is over all equal to the enthalpy of transition from phase I to phase Il. Our analysis yields the changes of an enthalpy associated with the biomolecule alone as a function of the water content. In the case of beta-CD, we can sketch a qualitative phase diagram, which assists the interpretation of details of our thermal experiments. The role of kinetic factors in the attainment of the thermodynamic equilibrium is investigated with H-2-NMR in samples recrystallized from heavy water. We find that, over a wide range of hydration levels, water molecules have a liquidlike diffusion, which, together with the compensation mechanism, explains the fast and nearly reversible dehydration of the beta-CD.