The aqueous solubility of β-cyclodextrin (β-CD), a cyclic carbohydrate comprising seven α-D-glucose molecules, is enhanced by 2-hydroxypropyl (2-HP) substitution of the hydroxyl groups at the CD rims. Our thorough analysis of the structural and solvation properties with different degrees of 2-hydroxypropyl substitution on β-CD using molecular dynamics simulations reveals that the solubility is enhanced at the cost of the structural distortion of the CD cyclic structure. Substitution at the secondary rim predominantly enhances the favourable interactions between CD and water by decreasing CD-CD hydrogen bonding and promoting CD-water hydrogen bonding. However, the effect of substitution at the primary rim on the CD-water interactions is minimal; the hydrogen bonds between water and the primary hydroxyl group in native CD merely get replaced by those between water and 2-HP, since the substitution makes the primary hydroxyl oxygen (O6 atom) inaccessible to water. In contrast, substitution at the primary rim maintains the structural integrity of CD, while substitution at the secondary rim results in structural distortion due to the disruption of the intramolecular hydrogen bond belt, even leading to cavity closure. Certain strategic substitutions of the primary hydroxyl groups can help in the reduction of structural distortion, depending upon the degree of substitution at the secondary hydroxyl rim. A detailed inspection of the simulation trajectory revealed that the tilting of glucose units with the primary hydroxyl oxygen (O6) pointing inward is the primary driver for cavity closure. Even though the dynamics of glucose tilting can influence the kinetics of host-guest complex formation, once the guest is well incorporated into the cavity, glucose tilting is inhibited and the cavity opens up as in native β-CD.