The use of advanced polarizable potentials in quantum mechanical/molecular mechanical (QM/MM) simulations has been shown to improve the overall accuracy of the calculation. We have developed a density-based potential called the Gaussian electrostatic model (GEM), which has been shown to provide very accurate environments for QM wave functions in QM/MM. In this contribution we present a new implementation of QM/GEM that extends our implementation to include all components (Coulomb, exchange-repulsion, polarization, and dispersion) for the total intermolecular interaction energy in QM/MM calculations, except for the charge-transfer term. The accuracy of the method is tested using a subset of water dimers from the water dimer potential energy surface reported by Babin et al. ( J. Chem. Theory Comput. 2013 9, 5395-5403). Additionally, results of the new implementation are contrasted with results obtained with the classical AMOEBA potential. Our results indicate that GEM provides an accurate MM environment with average root-mean-square error <0.15 kcal/mol for every intermolecular interaction energy component compared with SAPT2+3/aug-cc-pVTZ reference calculations.