The importance of polarization effects in the hydrogen-bonding structures of water is evaluated using classical molecular dynamics techniques with a polarizable potential model [Dang, L. X.; Chang, T.-M. J. Chem. Phys. 1997, 106, 8149]. The computed water monomer dipole moment in water clusters is significantly enhanced because of induction effects created by other water molecules. In particular, the magnitude of polarization effects reported recently by high-level ab initio calculations [Gregory, J. K.; Clary, D. C.; Liu, K.: Brown, M. G.; Saykally, R. J. Science 1997, 275, 814] is well-reproduced in our simulations. The structure of liquid water at ambient and supercritical conditions is investigated. The evolution of the hydrogen-bonding peak in g(OH) is in good agreement with recent data obtained by neutron diffraction with isotopic substitution experiments (NDIS) [Postorino, P.; Tromp, RH.; Ricci, M. A.; Soper, A. K.; Neilson, G. W. Nature 1993, 366, 668]. This behavior can be attributed to the variability of water dipole moments in different environments, At conditions near critical temperature, in contrast with the interpretation of the NDIS data, the data from our simulations indicated that a considerable degree of hydrogen bonding remains at this state. This result is in good agreement with very recent proton NMR chemical shift measurements.