The Thorpe-Ingold hypothesis for the gem-dimethyl effect in the cyclization reactions of 2-chloroethoxide derivatives has been investigated computationally in the gas phase and in aqueous solution. Ab initio MP2/6-311+G(d,p) and CBS-Q calculations reveal little intrinsic difference in reactivity with increasing a-methylation for the series of reactants 1-3. However, inclusion of continuum hydration or of explicit hydration through mixed quantum and statistical mechanics (MC/FEP) simulations does reproduce the substantial, experimentally observed rate increases with increasing a-methylation. Analysis of the MC/FEP results provides clear evidence that the rate increases stem primarily from increased steric hindrance to hydration of the nucleophilic oxygen atom with increasing a-methylation. Thus, the gem-dimethyl acceleration of oxirane formation for 1-3 is found to be predominantly a solvent effect.