Proteins are marginally stable, and the folding/unfolding equilibrium of proteins in aqueous solution can easily be altered by the addition of small organic molecules known as cosolvents. Cosolvents that shift the equilibrium toward the unfolded ensemble are termed denaturants, whereas those that favor the folded ensemble are known as protecting osmolytes. Urea is a widely used denaturant in protein folding studies, and the molecular mechanism of its action has been vigorously debated in the literature. Here we review recent experimental as well as computational studies that show an emerging consensus in this problem. Urea has been shown to denature proteins through a direct mechanism, by interacting favorably with the peptide backbone as well as the amino acid side chains. In contrast, the molecular mechanism by which the naturally occurring protecting osmolyte trimethylamine N-oxide (TMAO) stabilizes proteins is not clear. Recent studies have established the strong interaction of TMAO with water. Detailed molecular simulations, when used with force fields that incorporate these interactions, can provide insight into this problem. We present the development of a model for TMAO that is consistent with experimental observations and that provides physical insight into the role of cosolvent-cosolvent interaction in determining its preferential interaction with proteins.