A systematic theoretical study has been carried out on the effect of sequential addition of water molecules to neutral and mono positively charged acetic acid molecules by applying first principle based electronic structure theory. Geometry, dipole moment, and polarizability of hydrated clusters of neutral and mono positively charged acetic acid of the type CH3COOH center dot nH(2)O (n = 1-8) and [CH3COOH center dot nH(2)O] (n = 1, 2) are calculated at the omega B97X-D/aug-cc-pVDZ level of theory. Free energies of formation of the hydrated acid clusters, at different temperatures and pressures are determined. Solvent stabilization energy and interaction energy are also calculated at the CCSD(T)/6-311++G(d,p) level of theory. It is observed that in the case of neutral acetic acid, proton transfer from the acid molecule to solvent water molecules does not occur even with eight water molecules and the acid molecule remains in the undissociated form. High-energy equilibrium structures showing dissociation of acetic acid are obtained in case of hexahydrated and larger hydrated clusters only. However, dissociation of mono positively charged acetic acid occurs with just two water molecules. Interestingly, it is noted that in the case of dissociation, calculated bond dipole moments of the dissociating bonds of acetic acid in microhydated clusters shows a characteristic feature. IR spectra of CH3COOH center dot nH(2)O (n = 1-8) and [CH3COOH center dot nH(2)O](+) (n = 1-3) clusters are simulated and compared with the available experimental data.