Ab initio molecular orbital calculations have been used to compute thermodynamic constants (DeltaH degrees, DeltaS degrees, DeltaG degrees) for the stepwise hydration reactions of NO+(H2O)(n), and for the competing rearrangement reaction which produces HONO and H+(H2O)(n) (for n less than or equal to 4). Geometry optimizations and harmonic frequency calculations were performed at the MP2/6-311++G(2d,p) level, and relative energies were computed at the MP2/augcc-pVTZ level with MP2/6-311++G(2d,p) optimized geometries. The geometry changes and energetics of these competing solvation and rearrangement reactions have been studied, and reasons are proposed to explain why NO+(H2O)(n+1) formation is the dominant process for n = 1 and n = 2 but HONO + H+(H2O)(n) formation contributes for n = 3 and becomes more important for n = 4.