Recent experiments (Miller et al. 1987; Bell and Rossman 1992; Bai and Kohlstedt 1992) have shown that olivine, the dominant mineral in the Earth's upper mantle, can contain substantial amounts of water in the form of OH. There is uncertainty, however, as to the mechanisms by which water dissolves into the mineral structure and as to the site it occupies in the host lattice. We have therefore used atomistic computer simulation techniques based on the Born model of solids, to investigate the structures and energies of OH defects in olivine. Our calculations suggest that the most favourable route for incorporation of OH into olivine involves reactions with water accompanied by the reduction of ferric iron for which we obtain a solution energy of 0.46 eV. We propose therefore that the OH content will be largely controlled by the concentration of Fe3+.