Proteins have evolved to use water to help guide folding. A physically motivated, nonpairwise-additive model of water-mediated interactions added to a protein structure prediction Hamiltonian yields marked improvement in the quality of structure prediction for larger proteins. Free energy profile analysis suggests that long-range water-mediated potentials guide folding and smooth the underlying folding funnel. Analyzing simulation trajectories gives direct evidence that water-mediated interactions facilitate native-like packing of supersecondary structural elements. Long-range pairing of hydrophilic groups is an integral part of protein architecture. Specific water-mediated interactions are a universal feature of biomolecular recognition landscapes in both folding and binding.