Rigorous binding free energy methods in drug discovery are growing in popularity due to a combination of methodological advances, improvements in computer hardware, and workflow automation. These calculations typically use molecular dynamics (MD) to sample from the Boltzmann distribution of conformational states. However, when part or all the binding site is inaccessible to bulk solvent, the time needed for water molecules to equilibrate between bulk solvent and the binding site can be well beyond what is practical with standard MD. This sampling limitation is problematic in relative binding free energy calculations, which compute the reversible work of converting Ligand 1 to Ligand 2 within the binding site. Thus, if Ligand 1 is smaller and/or more polar than Ligand 2, the perturbation may allow additional water molecules to occupy a region of the binding site. However, this change in hydration may not be captured by standard MD simulations and may therefore lead to errors in the computed free energy. We recently developed a hybrid Monte Carlo/MD (MC/MD) method, which speeds the equilibration of water between bulk solvent and buried cavities, while sampling from the intended distribution of states. Here, we report on the use of this approach in the context of alchemical binding free energy calculations. We find that using MC/MD markedly improves the accuracy of the calculations and also reduces hysteresis between the forward and reverse perturbations, relative to matched calculations using only MD with or without the crystallographic water molecules. The present method is available for use in the AMBER simulation software.