The dissociation and association dynamics of N2O4-->--><--2NO(2) in liquid state are studied by classical molecular dynamics simulations of reactive liquid NO2. An OSPP+LJ potential between NO2 molecules, which is a sum of an orientation-sensitive pairwise potential (OSPP) between N-N atoms proposed in Paper I [J. Chem. Phys. 115, 10852 (2001)] and Lennard-Jones potentials between N-O and O-O atoms, has been used in the simulation. The reaction dynamics is studied as a function of well depth D-e and anisotropy factors of the OSPP potential: A(theta) (0less than or equal toA(theta)less than or equal to1) for the rocking angle and A(tau) (0less than or equal toA(tau)less than or equal to0.5) for the torsional angle of relative NO2-NO2 orientation. The lifetime tau(D) of initially prepared NO2 dimers is found to increase as D-e increases, A(theta) increases, and A(tau) decreases. Dissociation and association dynamics are studied in detail around the extreme limit of pure NO2-dimer liquid: D-e=0.12x10(-18) J, A(theta)=0.5, and A(tau)=0.1, which has been found to reproduce both the observed liquid phase equilibrium properties and Raman band shapes of the dissociation mode very well. The dissociation dynamics from microscopic reaction trajectories is compared with the potential of the mean force (PMF) as a function of the N-N distance R. The PMF of reactive liquid NO2 shows a transition state barrier at R=2.3-2.5 A, and NO2-trimer structure is found to be formed at the barrier. Two types of dissociation of the NO2 dimer-the dissociation by collisional activation of the reactive mode to cross the dissociation limit and the NO2-mediated dissociation via bond transfer-are studied. The latter needs less free energy and is found to be much more probable. The dissociation trajectories and PMF in reactive liquid NO2 are compared with those of a reactive NO2 pair in inert solvent N2O4. (C) 2004 American Institute of Physics.