Extensive ab initio calculations at different levels of theory have been performed with the 6-31G(d,p) basis set. Three minimum energy structures of (a), (b), and (c) were found on the ground (S-0) and excited (S-1) state surfaces of the phenol-(H2O)(2) complex, with cyclic structure (a) being the most stable. Experimentally inferred very low frequencies for intermolecular vibrations in S-1 were reproduced using the present calculations. The high vibrational mode density resulting from very low frequency vibrations of the structure (b) may be responsible for a broad electronic origin in the spectra of the phenol-(H2O)(2) complex. The intermolecular interaction has little influence on the structures of phenol and water, but a significant change is found in the properties upon complexation. The intramolecular vibrations, which have frequencies of the magnitude of the intermolecular vibrations or involve the OH group of phenol, are significantly affected by formation of complex. All of these have been discussed in detail.