Using ultrahigh resolution atomic force microscopy (AFM) operated in frequency modulation mode, we extend existing measurements of the force acting between hydrophobic surfaces immersed in water in three essential ways. (1) The measurement range, which was previously limited to distances longer than 2-3 nm, is extended to cover all distances, down to contact. The measurements disclose that the long-range attraction observed also by conventional techniques, turns at distances shorter than 1-2 nm into pronounced repulsion. (2) Simultaneous measurements of the dissipative component of the tip-surface interaction reveal an anomalously large dissipation commencing abruptly at the point where attraction begins. The dissipation is more than 2 orders of magnitude larger than expected from bulk water viscosity or from similar measurements between hydrophilic surfaces. (3) The short-range repulsion is oscillatory, indicating molecular ordering of the medium as the hydrophobic surfaces approach each other. The oscillation period, similar to 0.5 nm, is larger than the similar to 0.3 nm period observed with hydrophilic surfaces. Their range, similar to 4.5 nm, is longer as well. These observations are consistent with a conspicuous change in the properties of the surrounding medium, taking place simultaneously with the onset of attraction as the two surfaces approach each other.