Molecular dynamics simulations are employed to investigate aggregation and microheterogeneity in dilute solutions of 2-butoxyethanol (BE) in water. The BE concentration is varied from near infinite dilution to the mole fraction X(BE) = 0.04. It was found that large systems (32 000 molecules) are necessary to accommodate the BE aggregates that form in this concentration range. Simulations were performed with two different force fields, and similar results were obtained. At very low concentration, BE aggregation is not observed, but evidence is found for intramolecular hydrogen bonds (between the hydroxyl hydrogen and the ether oxygen of the same BE molecule) that form five-member ring configurations, similar to those reported in experimental studies of BE in non aqueous solvent. Initial signs of BE association appear at X(BE) approximate to 0.005, after which aggregation occurs rapidly, with aggregates that can be described as micelle-like being fully formed at X(BE) approximate to 0.02. This concentration agrees well with many experimental studies of aggregation in BE-water solutions. Between X(BE) = 0.02 and 0.04, the aggregates appear to grow a little in size, but the basic structure remains the same. At long range, the various pair correlation functions show clear density oscillations associated with BE aggregation. This allows us to identify the length scales of the existing microheterogeneity and to estimate the size of the BE aggregates. If we assume spherical aggregates, then our estimate of the radius at X(BE) = 0.04 (similar to 42 angstrom) is close to estimates obtained from light scattering and small-angle neutron scattering experiments.