The conformational behavior of a dipeptide analogue of tyrosine (TDA) has been investigated by density functional methods using the polarizable continuum model (PCM) for the description of solvent effects. Our study points out the interplay of backbone and side chain contributions in determining the relative stabilities of energy minima. In particular, stabilizing interactions between the NH bond and the aromatic ring have a significant effect. The topology of the potential energy surface is significantly modified in aqueous solution due to a general widening of low energy regions and to a stabilization of helical structures.