The structure and dynamics of aqueous solvation of ethanol and ethylene are studied by density functional theory based Car-Parrinello molecular dynamics. We did not find an enhancement of the structure of the hydrogen bonded network of hydrating water molecules. Both ethanol and ethylene can easily be accommodated in the hydrogen-bonded network of water molecules without altering its structure. This supports the conclusion from recent neutron diffraction experiments that there is no hydrophobic hydration around small hydrophobic groups. Analysis of the electronic charge distribution using Wannier functions shows that the dipole moment of ethanol increases from 1.8 D to 3.1 D upon solvation, while the apolar ethylene molecule attains an average dipole moment of 0.5 D. For ethylene, we identified configurations with pi-H bonded water molecules, that have rare fourfold hydrogen-bonded water coordination, yielding instantaneous dipole moments of ethylene of up to 1 D. The results provide valuable information for the improvement of empirical force fields, and point out that for an accurate description of the aqueous solvation of ethanol, and even of the apoler ethylene, polarizable force fields are required. (C) 2003 American Institute of Physics.