Simulations of liquid water using a model with atomic charges, dipoles, and anisotropic polarizabilities (NEMO) have been carried out by employing spherical cutoff, Ewald summation (ES), and reaction field (RF) boundary conditions. From trajectories of several ns, information on both structural, dynamical, as well as dielectric properties of polarizable water have been obtained. The sensitivity of these properties towards the applied boundary conditions along with finite system size effects have been examined and discussed. These results have been compared with simulations using an unpolarizable water model (SPC/E) conducted under the exact same conditions. For the polarizable model, it was found that an ordinary spherical cutoff tends to overestimate the induced polarization, resulting in an overestimation of the interaction energy, a sharper liquid structure, and slower dynamics, as compared with the Ewald summation and reaction field methods. The reaction field method displayed a larger system size sensitivity, and a system of at least 512 water molecules is needed to reach the thermodynamic limit, whereas 216 is sufficient for the ES. The computational effort required to simulate a polarizable system using ES was found to increase by a factor of 9 in comparison with the unpolarizable water model with the same boundary conditions. (C) 2000 American Institute of Physics. [S0021-9606(00)51013-7].