The conformational and dynamic properties of 1-octanol in neat and in water-saturated states have been investigated by H-1 NMR. It has been proved that neat 1-octanol is microheterogeneous in nature comprising regions enriched in either hydrocarbons or hydroxyl groups. A reversed micelle-like cluster model was proposed, where the octanol cluster has an inner polar core of hydrogen-bonded octanol hydroxyls and an outer shell of nonpolar alkyl chains radiating outside. It was also observed that the cluster structure of octanol experiences minor changes with the presence of water. In water-saturated octanol, water molecules associate via hydrogen bonding and reside in the innermost center of the polar region with restricted motion, whereas the octanol cluster structure is modified by loosening the compact structure. Moreover, the preferential solvations of both systems were tested and compared. It not only gives some clues about the microheterogeneity of the alcohol system and the structure of the cluster but also helps in advancing our understanding on the behavior and properties of the amphiphilic molecules system such as phospholipids.