Molecular dynamics computer simulations of 1-octanol and its mixtures with water have been performed. The liquid is composed of regions enriched in either hydrocarbons or hydroxyl groups. In neat octanol, the hydroxyl groups form clusters of long, thin chains. Upon the addition of water, the clusters become longer and more spherical, forming a structure that can be described as consisting of "overlapping elongated inverse micelles". The structures of the mixtures obtained at different hydration levels are consistent with those of experimental diffraction studies of water/octanol mixtures and previous computer simulations of neat and water-satured octanol. The saturation point of the model has been calculated using the cavity-bias particle insertion method. The solubility of water in octanol is slightly too low compared to experimental results, and suggestions for possible improvements to the force field are made.