To investigate the effects of temperature and hydration on the microstructure of polymer electrolyte membrane and the transport of water molecules and hydronium ions, molecular dynamics simulations are performed on Nafion 117 for a series of water contents at different temperatures. The interactions among the sulfonate groups, hydronium ions, and water molecules are studied according to the analysis of radial distribution functions and coordination numbers. The sizes and connectivity of water clusters are also discussed, and it is found that the hydration level plays a key role in the phase separation of the membrane. However, the effect of the temperature is slight. When the water content increases from 3.5 to 16, the size of water clusters in the membrane increases, and the clusters connect to each other to form continuous channels for diffusion of water molecules and hydronium ions. The diffusion coefficients are estimated by studying the mean square displacements. The results show that the diffusion of water molecules and hydronium ions are both enhanced by the increase of the temperature and hydration level. Furthermore, the diffusion coefficient of water molecules is always much larger than that of hydronium ions. However, the ratio of the diffusion coefficient of water molecules to that of hydronium ions decreases with the increase of water content.