Molecular dynamics simulations of RNA-protein complex between Escherichia coli loop E/helix IV (LE/HeIV) rRNA and L25 protein reveal a qualitative agreement between the experimental and simulated structures. The major groove of LE is a prominent rRNA cation-binding site. Divalent cations rigidify the LE major groove geometry whereas in the absence of divalent cations LE extensively interacts with monovalent cations via inner-shell binding. The HeIV region shows bistability of its major groove explaining the observed differences between x-ray and NMR structures. In agreement with the experiments, the simulations suggest that helix-alpha1 of L25 is the least stable part of the protein. Inclusion of Mg2+ cations into the simulations causes perturbation of basepairing at the LE/HeIV junction, which does not, however, affect the protein binding. The rRNA-protein complex is mediated by a number of highly specific hydration sites with long-residing water molecules and two of them are bound throughout the entire 24-ns simulation. Long-residing water molecules are seen also outside the RNA-protein contact areas with water-binding times substantially enhanced compared to simulations of free RNA. Long-residency hydration sites thus represent important elements of the three-dimensional structure of rRNA.