Water mediated interactions play an important role in self-assembly and molecular recognition processes in aqueous environments. In most cases, thermodynamic descriptions of these processes must rely on computations that are highly efficient, but molecularly approximate. To this end, we describe a thermodynamic framework for computing hydration free energies based on the Potential Distribution Theorem and its implementation in a modified inverse Widom algorithm that accounts separately for purely repulsive solute-water interactions and assumes gaussian fluctuations for solute-water attractive interaction energies. This framework is shown to be fundamentally equivalent to a recent quasi-chemical theory of solutions that has been applied extensively to compute free energies of ion hydration, and to account for the specific hydration by strongly associated water molecules in weak protein-protein interactions. Several illustrative examples of the computational method are presented, including computations of the excess chemical potential of water in confined environments and at interfaces of folded and unfolded polypeptides.