The selective functionalization of hydrocarbons with oxygen to produce valuable commodity chemicals is inherently challenging, because of the thermodynamic stability of the complete combustion products. Emerging green synthesis routes and sustainable energy production also rely on the success of selective oxidation reactions. As one of the unselective by-products, water is always present under reaction conditions and numerous studies indicate that the catalytic activity and selectivity of selective oxidation reactions may be tuned by judiciously controlling the water content during the reaction. Some experimentally verified examples include the preferential oxidation of carbon monoxide, direct hydrogen peroxide synthesis, propene epoxidation and alcohol oxidation. Finally, it has been predicted that the direct conversion of methane to methanol can benefit from the right amount of water near the active site during oxygen activation.