The effect of pressure on the structural and vibrational properties of the layered molecular crystal 1,1-diamino-2,2-dinitroethelene (FOX-7) are explored by first principles calculations. We observe significant changes in the calculated structural properties with different corrections for treating van der Waals interactions to Density Functional Theory (DFT), as compared with standard DFT functionals. In particular, the calculated ground state lattice parameters, volume and bulk modulus obtained with Grimme's scheme are found to agree well with experiments. The calculated vibrational frequencies demonstrates the dependence of the intra and inter-molecular interactions in FOX-7 under pressure. In addition, we also found a significant increment in the N-H...O hydrogen bond strength under compression. This is explained by the change in bond lengths between nitrogen, hydrogen and oxygen atoms, as well as calculated IR spectra under pressure. Finally, the computed band gap is about 2.3 eV with GGA, and is enhanced to 5.1 eV with the GW approximation, which reveals the importance of performing quasiparticle calculations in high energy density materials.