This paper contains a study of the pair and many-body interactions in cyclic water clusters: trimer, tetramer, and pentamer. Symmetry-adapted perturbation theory (SAPT) is applied to compute the pair-and three-body interactions directly and to analyze the individual electrostatic, induction, dispersion, and exchange contributions. The total interaction energies are also obtained by supermolecule coupled-cluster calculations including single, double, and noniterative triple excitations, CCSD(T). The three-body interactions contribute up to 28% of the total interaction energy in these water clusters in their equilibrium geometries and up to 50% of the barriers for different tunneling processes investigated in the trimer. The main three-body contribution is due to secondand third-order induction effects, but also three-body exchange effects are substantial. Dispersion contributions are only significant in the pair energy. The four-body effects are relatively small, and the five-body effects were found to be negligible. Furthermore, we tested the quality of various density functional methods for describing these many-body interactions.