The stability of proteins in aqueous solution is routinely enhanced by cosolvents such as glycerol. Glycerol is known to shift the native protein ensemble to more compact states. Glycerol also inhibits protein aggregation during the refolding of many proteins. However, mechanistic insight into protein stabilization and prevention of protein aggregation by glycerol is still lacking. In this study, we derive mechanisms of glycerol-induced protein stabilization by combining the thermodynamic framework of preferential interactions with molecular-level insight into solvent-protein interactions gained from molecular simulations. Contrary to the common conception that preferential hydration of proteins in polyol/water mixtures is determined by the molecular size of the polyol and the surface area of the protein, we present evidence that preferential hydration of proteins in glycerol/water mixtures mainly originates from electrostatic interactions that induce orientations of glycerol molecules at the protein surface such that glycerol is further excluded. These interactions shift the native protein toward more compact conformations. Moreover, glycerol preferentially interacts with large patches of contiguous hydrophobicity where glycerol acts as an amphiphilic interface between the hydrophobic surface and the polar solvent. Accordingly, we propose that glycerol prevents protein aggregation by inhibiting protein unfolding and by stabilizing aggregation-prone intermediates through preferential interactions with hydrophobic surface regions that favor amphiphilic interface orientations of glycerol. These mechanisms agree well with experimental data available in the literature, and we discuss the extent to which these mechanisms apply to other cosolvents, including polyols, arginine, and urea.