Hydrophobic effects in aqueous urea were analyzed by molecular dynamics simulations. The contribution of solvents to the potential of mean force between two methane molecules was calculated by using molecular dynamics simulations and was compared with the solubility data of hydrocarbons in aqueous urea. Both the simulation results and the solubility data indicated that urea stabilizes methane-methane association. The stabilization was due to increasing the solvation free energies of small hydrocarbons such as methane by addition of urea. The solvation-free energies of larger hydrocarbons, on the other hand, are decreased by addition of urea. This effect of the solute size on hydrophobic free energies in aqueous urea was also analyzed by using molecular dynamics simulations by means of division of the solvation process into parts: the cavity formation and the introduction of the solute-solvent attractive interactions. In the cavity; formation, urea increased hydrophobic free energies, and in the introduction of the solute-solvent attractive interactions, urea decreased hydrophobic free energies. The influence of urea on hydrophobic free energies was determined by the,balance of effects of the two parts of the salvation process.