Using a combined quantum mechanical and molecular mechanical (QM/MM) potential, we have carried out Monte Carlo simulations to investigate the hydrophobic and hydrogen-bonding effects on Diels-Alder reactions in aqueous solution. Two prototypical systems were considered, including the reaction of cyclopentadiene (CP) with methyl vinyl ketone (MVK) and the reaction of cyclopentadiene with isoprene. Analysis of the simulation results revealed that the hydrophobic effect is significant in both reactions. Since hydrogen bonding interactions are not involved in the reaction of CP and isoprene, the entire transition-state stabilization (4.6 ± 0.3 kcal/mol) can be attributed to the hydrophobic effect. In the reaction of CP and MVK, enhanced hydrogen-bonding interaction and the hydrophobic effect contribute equally to the transition state stabilization (-3.5 ± 0.4 kcal/mol). These findings are compared with the experimental results and predictions from previous theoretical studies.