In order to clarify the mechanism of denaturant-induced unfolding of proteins we have calculated the interactions between hydrophobic and ionic species in aqueous guanidinium chloride and urea solutions using molecular dynamics simulations. Hydrophobic association is not significantly changed in urea or guanidinium chloride solutions. The strength of interaction between ion pairs is greatly diminished by the guanidinium ion. Although the changes in electrostatic interactions in urea are small, examination of structures, using appropriate pair functions, of urea and water around the solutes show strong hydrogen bonding between urea's carbonyl oxygen and the positively charged solute. Our results strongly suggest protein denaturation occurs by the direct interaction model according to which the most commonly used denaturants unfold proteins by altering electrostatic interactions either by solvating the charged residues or by engaging in hydrogen bonds with the protein backbone. To further validate the direct interaction model we show that, in urea and guanidinium chloride solutions, unfolding of an unusually stable helix (H1) from mouse PrPC (residues 144-153) occurs by hydrogen bonding of denaturants to charged side chains and backbone carbonyl groups.