By means of atomistic molecular dynamics simulations we investigate the behaviour of poly(N-isopropylacrylamide), PNIPAM, in water at temperatures below and above the lower critical solution temperature (LCST), including the undercooled regime. The transition between water soluble and insoluble states at the LCST is described as a cooperative process involving an intramolecular coil-to-globule transition preceding the aggregation of chains and the polymer precipitation. In this work we investigate the molecular origin of such cooperativity and the evolution of the hydration pattern in the undercooled polymer solution. The solution behaviour of an atactic 30-mer at high dilution is studied in the temperature interval from 243 to 323 K with a favourable comparison to available experimental data. In the water soluble states of PNIPAM we detect a correlation between polymer segmental dynamics and diffusion motion of bound water, occurring with the same activation energy. Simulation results show that below the coil-to-globule transition temperature PNIPAM is surrounded by a network of hydrogen bonded water molecules and that the cooperativity arises from the structuring of water clusters in proximity to hydrophobic groups. Differently, the perturbation of the hydrogen bond pattern involving water and amide groups occurs above the transition temperature. Altogether these findings reveal that even above the LCST PNIPAM remains largely hydrated and that the coil-to-globule transition is related with a significant rearrangement of the solvent in the proximity of the surface of the polymer. The comparison between the hydrogen bonding of water in the surrounding of PNIPAM isopropyl groups and in the bulk displays a decreased structuring of solvent at the hydrophobic polymer–water interface across the transition temperature, as expected because of the topological extension along the chain of such interface. No evidence of an upper critical solution temperature behaviour, postulated in theoretical and thermodynamics studies of PNIPAM aqueous solution, is observed in the low temperature domain.