We are presenting POSSIM (POlarizable Simulations with Second-order Interaction Model)—a software package and a set of parameters designed for molecular simulations. The key feature of POSSIM is that the electrostatic polarization is taken into account using a previously introduced fast formalism. This permits cutting the computational cost of using the explicit polarization by about an order of magnitude. In this article, parameters for water, methane, ethane, propane, butane, methanol, and N-methylacetamide (NMA) are introduced. These molecules are viewed as model systems for protein simulations. We have achieved our goal of ca. 0.5 kcal/mol accuracy for gas-phase dimerization energies and no more than 2% deviations in liquid state heats of vaporization and densities. Moreover, free energies of hydration of the polarizable methane, ethane, and methanol have been calculated using the statistical perturbation theory. These calculations serve as a model for calculating protein pKa shifts and ligand binding affinities. The free energies of hydration were found to be 2.12, 1.80, and −4.95 kcal/mol for methane, ethane, and methanol, respectively. The experimentally determined literature values are 1.91, 1.83, and −5.11 kcal/mol. The POSSIM average error in these absolute free energies of hydration is only about 0.13 kcal/mol. Use of the statistical perturbation theory with polarizable force fields is not widespread, and we believe that this work opens the road to further development of the POSSIM force field and its applications for obtaining accurate energies in protein-related computer modeling.