The antibiotic vancomycin targets lipid II, blocking cell wall synthesis in Gram-positive bacteria. Despite extensive study, questions remain regarding how it recognizes its primary ligand and what is the most biologically relevant form of vancomycin. In this study, molecular dynamics simulation techniques have been used to examine the process of ligand binding and dimerization of vancomycin. Starting from one or more vancomycin monomers in solution, together with different peptide ligands derived from lipid II, the simulations predict the structures of the ligated monomeric and dimeric complexes to within 0.1 nm rmsd of the structures determined experimentally. The simulations reproduce the conformation transitions observed by NMR and suggest that proposed differences between the crystal structure and the solution structure are an artifact of the way the NMR data has been interpreted in terms of a structural model. The spontaneous formation of both back-to-back and face-to-face dimers was observed in the simulations. This has allowed a detailed analysis of the origin of the cooperatively between ligand binding and dimerization and suggests that the formation of face-to-face dimers could be functionally significant. The work also highlights the possible role of structural water in stabilizing the vancomycin ligand complex and its role in the manifestation of vancomycin resistance.