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We report the application of our fragment‐based quantum chemistry model MIM (Molecules‐In‐Molecules) with electrostatic embedding. The method is termed "EE‐MIM (Electrostatically Embedded Molecules‐In‐Molecules)" and accounts for the missing electrostatic interactions in the subsystems resulting from fragmentation. Point charges placed at the atomic positions are used to represent the interaction of each subsystem with the rest of the molecule with minimal increase in the computational cost. We have carefully calibrated this model on a range of different sizes of clusters containing up to 57 water molecules. The fragmentation methods have been applied with the goal of reproducing the unfragmented total energy at the MP2/6‐311G(d,p) level. Comparative analysis has been carried out between MIM and EE‐MIM to gauge the impact of electrostatic embedding. Performance of several different parameters such as the type of charge and levels of fragmentation are analyzed for the prediction of absolute energies. The use of background charges in subsystem calculations improves the performance of both one‐ and two‐layer MIM while it is noticeably important in the case of one‐layer MIM. Embedded charges for two‐layer MIM are obtained from a full system calculation at the low‐level. For one‐layer MIM, in the absence of a full system calculation, two different types of embedded charges, namely, Geometry dependent (GD) and geometry independent (GI) charges, are used. A self‐consistent procedure is employed to obtain GD charges. We have further tested our method on challenging charged systems with stronger intermolecular interactions, namely, protonated ammonia clusters (containing up to 30 ammonia molecules). The observations are similar to water clusters with improved performance using embedded charges. Overall, the performance of NPA charges as embedded charges is found to be the best. [ABSTRACT FROM AUTHOR]