To investigate the nature of hydrophobic collapse considered to be the driving force in protein folding, we have simulated aqueous solutions of two model hydrophobic solutes, methane and isobutylene. Using a novel methodology for determining contacts, we can precisely follow hydrophobic aggregation as it proceeds through three stages: dispersed, transition, and collapsed. Theoretical modeling of the cluster formation observed by simulation indicates that this aggregation is cooperative and that the simulations favor the formation of a single cluster midway through the transition stage. This defines a minimum solute hydrophobic core volume. We compare this with protein hydrophobic core volumes determined from solved crystal structures. Our analysis shows that the solute core volume roughly estimates the minimum core size required for independent hydrophobic stabilization of a protein and defines a limiting concentration of nonpolar residues that can cause hydrophobic collapse. These results suggest that the physical forces driving aggregation of hydrophobic molecules in water is indeed responsible for protein folding.