Temperature-induced phase separation of poly(N-isopropylacrylamide) in aqueous solutions was studied by attenuated total reflectance (ATR)/Fourier transform infrared spectroscopy. The main objectives of the study were to understand, on a molecular level, the role of hydrogen bonding and hydrophobic effects below and above the phase-separation temperature and to derive the scenario leading to this process. Understanding the behavior of this particular system could be quite relevant to many biological phenomena, such as protein denaturation. The temperature-induced phase transition was easily detected by the ATR method. A sharp increase in the peaks of both hydrophobic and hydrophilic groups of the polymer and a decrease in the water-related signals could be explained in terms of the formation of a polymer-enriched film near the ATR crystal. Deconvolution of the amide I and amide II peaks and the O-H stretch envelope of water revealed that the phase-separation scenario could be divided, below the phase-separation temperature, into two steps. The first step consisted of the breaking of intermolecular hydrogen bonds between the amide groups of the polymer and the solvent and the formation of free amide groups, and the second step consisted of an increase in intramolecular hydrogen bonding, which induced a coil-globule transition. No changes in the hydrophobic signals below the separation temperature could be observed, suggesting that hydrophobic interactions played a dominant role during the aggregation of the collapsed chains but not before.