Crystalline hydrates of swelling clay minerals (smectites) exhibit a strong coupling between their ion exchange and hydration/dehydration reactions. The uptake or removal of water from smectite interlayers as a result of a change in the environmental conditions also leads to the partitioning of cations. Three factors, the solid ion composition, the solid basal spacing/water content, and the aqueous solution composition, are all implicated in controlling the thermodynamics of ion exchange. However, conventional approaches to measuring the exchange free energy cannot separate the influence of each of these individual factors. Here, we explore the energetics of the swelling and ion exchange reactions in montmorillonite using a potential of mean force approach and the thermodynamic integration method within molecular simulations. We investigate the influence of solution and clay composition on the spontaneity of the reactions, focusing on the 2 water-layer hydration state. The swelling simulations provide the equilibrium water content, interlayer water structure, and basal spacings, while thermodynamic integration of sodium–potassium exchange in the aqueous solution and solid phase are combined to calculate ion exchange free energies as a function of solution composition. Results confirm the tendency of the clay to collapse to lower hydration states as the concentration of the solution increases. Changes to the equilibrium water content, even at fixed hydration states, and the composition of the mixed electrolyte solution play a critical role in driving ion exchange and the selectivities of the clay to the exchanged cation, while the composition of the solid phase is shown to be insignificant. These findings underscore the extreme sensitivity of clay swelling and ion exchange thermodynamics to small (tenths of an Angstrom) deviations in layer spacing.