A model of water is introduced that dissociates into either ionic or covalent molecular fragments. The model is based on a semiempirical calculation embedded in a molecular mechanics approach. It contains electronic degrees of freedom that allow the calculation of partial charges that vary smoothly from the bound state to the dissociated states. The hydrogen bond is modeled classically with Coulomb interactions, and shows significant improvement in predicting cluster behavior by adding directional character via an overlap between a lone pair orbital on oxygen and the hydrogen of an adjacent molecule. An implicit bond polarization is present due to stretching bonds and charge transfer when the hydrogen bonds are formed. The energetic and geometric properties of water dissociation products, molecular clusters, and ionic clusters are presented.