Abstract The term hydrophobic interactions denotes the tendency of relatively apolar molecules to stick together in aqueous solution. These interactions are of importance in many chemical disciplines, including the chemistry of in vivo processes. Enzyme‐substrate interactions, the assembly of lipids in biomembranes, surfactant aggregation, and kinetic solvent effects in water‐rich solutions are all predominantly governed by hydrophobic interactions. Despite extensive research efforts, the hydration of apolar molecules and the noncovalent interactions between these molecules in water are still poorly understood. In fact, the question as to what the driving force for hydrophobic intractions is shifts the study into a quest for a detailed understanding of the remarkable properties of liquid water. This review highlights some of the novel insights that have been obtained in the past decade. The emphasis is on both hydrophobic hydration and hydrophobic interactions since both phenomena are intimately connected. Several traditional views have been found to be deeply unsatisfactory, and courageous attempts have been made to conceptualize the driving force behind pairwise and bulk hydrophobic interactions. The review presents an admittedly personal selection of the recent experimental and theoretical developments, and when necessary, reference is made to relevant studies of earlier date.