Urea is ubiquitously used as a protein denaturant. To study the structure and energetics of aqueous urea solutions, we have carried out molecular dynamics simulations for a wide range of urea concentrations and temperatures. The hydrogen bonds between urea and water were found to be significantly weaker than those between water molecules, which drives urea self-aggregation due to the hydrophobic effect. From the reduction of the water exposed urea surface area, urea was found to exhibit an aggregation degree of ca. 20% at concentrations commonly used for protein denaturation. Structurally, three distinct urea pair conformations were identified and their populations were analyzed by translational and orientational pair distribution functions. Furthermore, urea was found to strengthen water structure in terms of hydrogen bond energies and population of solvation shells. Our findings are consistent with a direct interaction between urea and the protein as the main driving force for protein denaturation. As an additional, more indirect effect, urea was found to enhance water structure, which would suggest a weakening of the hydrophobic effect.