Dielectric relaxation and NMR spectrum of water in biological systems such as proteins, DNA, and reverse micelles can often be described by two widely different time constants, one of which is in the picosecond while the other is in the nanosecond regime. Although it is widely believed that the bimodal relaxation arises from water at the hydration shell, a quantitative understanding of this important phenomenon is lacking, In this article we present a theory of dielectric relaxation of biological water. The time dependent relaxation of biological water is described in terms of a dynamic equilibrium between the free and bound water molecules, It is assumed that only the free water molecules undergo orientational motion; the bound water contribution enters only through the rotation of the biomolecule, which is also considered, The dielectric relaxation is then determined by the equilibrium constant between the two species and the rate of conversion from bound to free slate and vice versa. However, the dielectric relaxation in such complex biomolecular systems depends on several parameters such as the rotational time constant of the protein molecule, the dimension of the hydration shell, the strength of the hydrogen bond, the static dielectric constant of the water bound to the biomolecule, etc. The present theory includes all these aspects in a consistent way. The results are shown to be in very good agreement with all the known results. The present study can be helpful in understanding the solvation of biomolecules such as proteins.