The structures and hydration Energies of small water clusters containing a sodium atom or ion are investigated within density-functional theory by using the Becke-Lee-Yang-Parr (BLYP) generalized gradient corrections to the local density approximation exchange and correlation energy, norm-conserving pseudopotentials, and a plane-wave expansion of Kohn-Sham orbitals. The hydration energies obtained for both neutral and ionized clusters, as well as the ionization potentials, are in good agreement with experiment and with available quantum-chemical calculations.