Accurate description of hydrogen-bonding energies between water molecules and van der Waals interactions between guest molecules and host water cages is crucial for study of methane hydrates (MHs). Using high-level ab initio MP2 and CCSD(T) results as the reference, we carefully assessed the performance of a variety of exchange-correlation functionals and various basis sets in describing the noncovalent interactions in MH. The functionals under investigation include the conventional GGA, meta-GGA, and hybrid functionals (PBE, PW91, TPSS, TPSSh, B3LYP, and X3LYP), long-range corrected functionals (ωB97X, ωB97, LC-ωPBE, CAM-B3LYP, and LC-TPSS), the newly developed Minnesota class functionals (M06-L, M06-HF, M06, and M06-2X), and the dispersion-corrected density functional theory (DFT) (DFT-D) methods (B97-D, ωB97X-D, PBE-TS, PBE-Grimme, and PW91-OBS). We found that the conventional functionals are not suitable for MH, notably, the widely used B3LYP functional even predicts repulsive interaction between CH(4) and (H(2)O)(6) cluster. M06-2X is the best among the M06-Class functionals. The ωB97X-D outperforms the other DFT-D methods and is recommended for accurate first-principles calculations of MH. B97-D is also acceptable as a compromise of computational cost and precision. Considering both accuracy and efficiency, B97-D, ωB97X-D, and M06-2X functional with 6-311++G(2d,2p) basis set without basis set superposition error (BSSE) correction are recommended. Though a fairly large basis set (e.g., aug-cc-pVTZ) and BSSE correction are necessary for a reliable MP2 calculation, DFT methods are less sensitive to the basis set and BSSE correction if the basis set is sufficient (e.g., 6-311++G(2d,2p)). These assessments provide useful guidance for choosing appropriate methodology of first-principles simulation of MH and related systems. © 2012 Wiley Periodicals, Inc.