Car-Parrinello molecular dynamics (CPMD) and Car-Parrinello mixed quantum mechanics/classical mechanics (CP-QM/MM) calculations were performed for o-betaine (OB) in the gas phase and water as solvent to study the solvent dependence on its molecular properties: geometry, charge distribution, and dipole moment. It is found that the molecular geometry in the gas phase is close to the planar structure, while in the water it is a twisted structure. The calculations clearly show that in both the gas phase and water the OB molecule is highly flexible with a large amplitude for the twist angle motion. The average gas-phase dipole moment for OB doubles in water, something that concords with a strong increase of total charge on phenoxide and pyridinium rings. We also investigated the solvatochromic shift in the pi-pi* and n-pi* transitions by carrying out INDO/CIS calculations for the gas-phase and solution-phase configurations obtained from the CPMD and CP-QM/MM calculations with results that are in good agreement with available experimental values (J. Chem. Soc., Perkin Trans. 2 1999, 1, 713). Our work indicates the importance of allowing full structural and dynamic flexibility of dye-solvent systems in predicting their basic solvatochromic properties.