The annealing of polymer electrolyte membranes is known to affect the membrane structure and proton conductivity. The observed changes depend drastically upon the annealing temperatures and cooling rates. In this study, we have performed a fully atomistic classical molecular dynamics simulation of hydrated Nafion at various hydration levels and annealing rates. The simulations show the compression of hydrophobic Nafion domains by larger water clusters, with a strong antiplasticization effect upon hydration, demonstrated by increasing the glass-transition temperature. The close-range proximity of sulfonate-sulfonate groups of Nafion pendant side chains remains unchanged with the simulated cooling rates. The water clusters in hydrated Nafion become more disconnected and larger in size with slower cooling rates/increased annealing time. This results in the decrease of water and hydronium diffusivity and the corresponding conductivity, thereby explaining qualitatively the experimental observations.