The proton-transfer reaction of sulfuric acid (H2SO4) and ammonia (NH3) and the effect of the first two water (H2O) molecules were studied by density functional theory and ab initio molecular orbital theory. The equilibrium structures, binding energies, and harmonic frequencies were calculated for each of the three clusters H2SO4-NH3-(H2O)(n) (n = 0, 1, 2) using the hybrid density functional (B3LYP) and the second-order Moller-Plesset perturbation approximation (MP2) methods with the 6-311++G(d,p) basis set. Without water (n = 0), the H2SO4-NH3 system was determined to be only hydrogen bonded, with H2SO4 acting as the hydrogen-bond donor and NH3 as the acceptor. However, in the presence of one or two water molecules (n = 1 or 2), the H2SO4-NH3 unit exists only as the NH4+. H2SO4- ion pair that results from a complete proton transfer from H2SO4 to NH3. The analysis of selected equilibrium bond lengths, binding energies, and harmonic frequencies of the clusters provided strong support for the complete proton transfer in the presence of one or two water molecules. Atmospheric implications of the study are discussed.