Octanol−water partition coefficients are extraordinarily successful for correlating and predicting numerous processes of pharmacological and environmental importance. The amphiphilic nature of the 1-octanol molecules allows the octanol phase to mimic the complexities of many different environments ranging from biomembranes to soil. However, the structural details of the octanol phase and whether its structure is altered upon water saturation are not yet fully understood. Configurational-bias Monte Carlo simulations in the Gibbs ensemble demonstrate that a diverse spectrum of hydrogen-bonded aggregates exists in dry and wet 1-octanol, and that water saturation substantially alters the 1-octanol environment from predominantly linear aggregates in dry octanol to larger cylindrical micelles with water cores in wet octanol. These simulation results are able to reconcile the conflicting views (chainlike or water-centered aggregates vs spherical micelles) of the 1-octanol structure inferred from thermodynamic arguments, spectroscopic measurements, and diffraction experiments. Calculated partition constants quantify the influence of water saturation on the solubility characteristics of the dry and wet octanol phases.