In this work we present a Monte Carlo study of a methanol-water mixture. The model potentials used includes polarization and nonadditive effects in the intermolecular interactions. The parameters were fitted to two; and three-body energy surfaces computed ab initio with a basis set of 2 zeta plus polarization quality. Correlation was included at the MP2 level, and the basis set superposition error was corrected with the counterpoise method. Very long runs, 20x10(6) configurations, were used to assure that equilibrium was attained. Good agreement with experiment was found for the structural data; the carbon to water oxygen and the hydrogen to hydrogen radial distribution functions. We studied the hydrophobic hydration of the methyl group and the effect of the solute on the water structure. We found that there is hydration of the hydroxyl group and a caging of the methyl group; that the solute does indeed affect the water structure at close distance to the solute but that this effect is masked by the average over the whole system. The water structure is disrupted by a slight broadening of the first peak in the O-O rdf and a shift of the second peak toward larger distances, we have also found that there is some methanol-methanol association.