Cyrene, a recently introduced bio-based green solvent, behaves as a hydrotrope, greatly increasing the aqueous solubility of hydrophobic substances in water. Moreover, water, when present in small quantities, has also been shown to increase the solubility of hydrophobic substances in Cyrene. Albeit of large practical importance, the understanding of the solvation ability of water/Cyrene mixtures is hampered by a lack of fundamental knowledge of their solvation mechanisms, which is further complicated by a chemical equilibrium established between the ketone form of Cyrene and water, yielding the diol form of Cyrene. In this work, COSMO-RS is used to rationalize the co-solvency effect of water on Cyrene.It is shown here that COSMO-RS can accurately predict the solubility of hydrophobic substances in water/Cyrene mixtures, in the entire composition range from pure water to pure Cyrene. The predictions of the model show that the ketone form of Cyrene controls its hydrotropic ability, supporting the concept of cooperative hydrotropy. Using COSMO-RS to assess molecular contacts probability, it is also shown that water, when added in small quantities to Cyrene, acts as a co-solvent by preferentially interacting with the solute as a hydrogen bond acceptor, effectively doubling the hydrogen bond donning ability of the solute and, thus, maximizing the interactions with Cyrene. In turn, this leads to a solubility increase of hydrophobic substances in wet Cyrene.