In this paper, we combine high-level ab initio quantum chemical calculations with a continuum description of the solvent to obtain accurate solvation free energies of organic solutes in water. By using correlated wave functions at the generalized valence bond/perfect pairing (GVB-PP) level, we are able to efficiently produce accurate gas-phase charge distributions. These are then used to obtain solvation energies in a self-consistent formalism which cycles through quantum chemical calculations in the solvent reaction field and continuum electrostatic calculations utilizing polarized solute charges. An average error of 0.6 kcal/mol for solvation energies is obtained for 29 molecules. A systematic discrepancy between theory and experiment is obtained for the difference in solvation foe energy between several methylated and unmethylated primary amines and amides. This poses a major puzzle in theoretical modeling of solvation effects.