We apply density functional theory in the gradient-corrected local-density approximation to the determination of structural properties and harmonic vibrational modes of trehalose in the gas phase and in the monohydrate crystal. We analyze the local conformation and the relative strength of intra- and intermolecular hydrogen bonds, and we discuss the effects of the crystal environment on the molecular geometry and vibrational frequencies. The density functional results are used to assess the quality of a recent molecular mechanics model. This simplified scheme provides a fairly good description of ground-state geometries, while vibrational properties are only in qualitative agreement with those computed by the density functional method.