The effect of an aqueous phase on phenol hydrogenation over Pt and Ni catalysts was investigated using density functional theory-based ab initio molecular dynamics calculations. The adsorption of phenol and the addition of the first and second hydrogen adatoms to three, ring carbon positions (ortho, meta, and para with respect to the phenolic OH group) were explored in both vacuum and liquid water. The major change in the electronic structure of both Pt(111) and Ni(111) surfaces, between a gaseous and liquid phase environment, results from a repulsion between the electrons of the liquid water and the diffuse tail of electron density emanating from the metal surface. The redistribution of the metal's electrons toward the subsurface layer lowers the metal work function by about 1 eV. The lower work function gives the liquid-covered metal a higher chemical reduction strength and, in consequence, a lower oxidation strength, which, in turn lowers the phenol adsorption energy, despite the stabilizing influence of the solvation of the partly positively charged adsorbate. At both the solid/vapor and the solid/water interface, H adatom addition involves neutral H atom transfer hence the reaction barriers for adding H adatoms to phenol are lowered by only 10-20 kJ/mol, due to a small stabilizing at the transition state. More importantly, the liquid environment significantly influences the relative energetics of charged, surface-bound intermediates and of proton-transfer reactions like keto/enol isomerization. For phenol hydrogenation, solvation in water results in an energetic preference to form ketones as a result of tautomerization of surface-bound enol intermediates.