The C3H2O potential energy surface, including the C-3 . H2O complex, hydroxypropadienylidene, propynal, cyclopropenone, and propadienone, has been calculated at the HF/6-31G*, QCISD(T)/6-31G*//HF/6-31G*, and MP2/6-31G* levels. It is shown that photolysis of the C-3 . H2O complex leads initially to hydroxypropadienylidene, as has been observed. Further photolysis is predicted to lead to propynal via successive H atom migrations along the CCCO framework. Photodepletion of propynal generates either cyclopropenone or propadienone, from either of which acetylene and CO should be produced. Experimental evidence is presented to support this mechanism. It is proposed that the propynal observed in the interstellar medium is produced via the photolysis of the C-3 . H2O complex in the icy mantles of interstellar dust grains and not via gaseous ion-molecule reactions, as previously proposed.