Density functional theory (B3LYP//6-311+G*) calculations including Poisson-Boltzmann implicit solvent were used to study the hydration of glyoxal and subsequent formation of dimeric species in solution. Our calculations show that the dioxolane ring dimer is the thermodynamic sink among all monomers and dimers with varying degrees of hydration. Although fully hydrated species are thermodynamically favored over their less hydrated counterparts, we find that a preliminary dehydration step precedes dimerization and ring closure. Ring closure of the open dimer monohydrate to the dioxolane ring dimer is kinetically favored over both hydration to the open dimer dihydrate and ring closure to form the dioxane ring dimer. The kinetic barriers for different geometric approaches for dimerization suggest an explanation why oligomerization stops after the formation of a dioxolane ring trimer as observed experimentally.