Full-quantum mechanical fragment molecular orbital-based molecular dynamics (FMO-MD) simulations were applied to the hydration reaction of formaldehyde in water solution under neutral conditions. Two mechanisms, a concerted and a stepwise one, were considered with respect to the nucleophilic addition and the proton transfer. Preliminary molecular orbital calculations by means of polarized continuum model reaction field predicted that the hydration prefers a concerted mechanism. Because the calculated activation barriers were too high for free FMO-MD simulations to give reactive trajectories spontaneously, a More O’Ferrall–Jencks-type diagram was constructed from the statistical analysis of the FMO-MD simulations with constraint dynamics. The diagram showed that the hydration proceeds through a zwitterionic-like (ZW-like) structure. The free energy changes along the reaction coordinate calculated by means of the blue moon ensemble for the hydration and the amination of formaldehyde indicated that the hydration proceeds through a concerted process through the ZW-like structure, whereas the amination goes through a stepwise mechanism with a ZW intermediate. In inspection of the FMO-MD trajectories, water-mediated cyclic proton transfers were observed in both reactions on the way from the ZW-like structure to the product. These proton transfers also have an asynchronous character, in which deprotonation from the nucleophilic oxygen atom (or nitrogen atom for amination) precedes the protonation of the carbonyl oxygen atom. The results showed the strong advantage of the FMO-MD simulations to obtain detailed information at a molecular level for solution reactions.