Solvent effects on the thermodynamics of two processes—folding of proteins and association between proteins—are examined in detail. A complete inventory of the multitude of solvent effects may be obtained by employing the concept of conditional solvation free energy. This theoretical tool allows for the isolation of specific side-chain effects from the entire protein and for the study of its contribution to the overall free energy change in small model compounds. Some numerical examples are presented, and ways of estimating other cases, for which no relevant experimental data are available, are suggested. Our findings lead to the conclusion that the currently used hydrophobicity scales, based on partition coefficients between water and an organic solvent, are inadequate measures of the contribution of side chains being transferred from water to the interior of the protein. We have also tentatively concluded that correlation between hydrophilic functional groups might be more important than correlations between hydrophobic side chains.