The disaccharide trehalose stabilizes proteins against unfolding, but the underlying mechanism is not well understood. Because trehalose is preferentially excluded from the protein surface, it is of interest to examine how trehalose modifies the structure and dynamics of the solvent. From the spin relaxation rates of deuterated trehalose and (17)O-enriched water, we obtain the rotational dynamics of trehalose and water in solutions over wide ranges of concentration (0.025-1.5 M) and temperature (236-293 K). The results reveal direct solute-solute interactions at all concentrations, consistent with transient trehalose clusters. Similar to other organic solutes, the trehalose perturbation of water rotation (and hydrogen-bond exchange) is modest: a factor 1.6 (at 298 K) on average for the 47 water molecules in the first hydration layer. The deviation of the solute tumbling time from the Stokes-Einstein-Debye relation is partly caused by a dynamic solvent effect that is often modeled by incorporating "bound water" in the hydrodynamic volume. By comparing the measured temperature dependences of trehalose and water dynamics, we demonstrate that a more realistic local viscosity model accounts for this second-order dynamic coupling.