Molecular dynamics simulations of the S-peptide analogue AETAAAKFLREHMDS in water at 278 and 358 K, and in 8 M urea at 278 K were performed. The results show agreement with experiments. The helix is stable at low temperature (278 K), while at 358 K, unfolding is observed. The effects of urea on protein stability have been studied. The data support a model in which urea denatures proteins by: (1) diminishing the hydrophobic effect by displacing water molecules from the solvent shell around nonpolar groups; and (2) binding directly to amide units (NH and CO groups) via hydrogen bonds. The results of cluster analysis and essential dynamics analysis suggest that the mechanism of urea and thermal-induced denaturation may not be the same.