Water molecules at protein-ligand interfaces are often of significant pharmaceutical interest, owing in part to the entropy which can be released upon the displacement of an ordered water by a therapeutic compound. Protein structures may not, however, completely resolve all critical bound water molecules, or there may be no experimental data available. As such, predicting the location of water molecules in the absence of a crystal structure is important in the context of rational drug design. Grand canonical Monte Carlo (GCMC) is a computational technique that is gaining popularity for the simulation of buried water sites. In this work, we assess the ability of GCMC to accurately predict water binding locations, using a dataset that we have curated, containing 108 unique structures of complexes between proteins and Food and Drug Administration (FDA)-approved small-molecule drugs. We show that GCMC correctly predicts 81.4% of nonbulk crystallographic water sites to within 1.4 Å. However, our analysis demonstrates that the reported performance of water prediction methods is highly sensitive to the way in which the performance is measured. We also find that crystallographic water sites with more protein/ligand hydrogen bonds and stronger electron density are more reliably predicted by GCMC. An analysis of water networks revealed that more than half of the structures contain at least one ligand-contacting water network. In these cases, displacement of a water site by a ligand modification might yield unexpected results if the larger network is destabilized. Cooperative effects between waters should therefore be explicitly considered in structure-based drug design.