Localized surface plasmon resonances (LSPRs) have attracted much recent attention for their potential in promoting chemical reactions with light. However, the mechanism of LSPR-induced chemical reactions is still not clear, even for H-2 dissociation on metal nanoparticles. In this work, we investigate the mechanism for photoinduced H-2 dissociation using a simple H-2@PAu6 model. Our time-dependent density functional theory calculations indicate that the initial excitation is largely restricted to the metal cluster, involving intraband excitation that produces hot electrons (HEs). However, diabatization via overlapping orbitals reveals two types of nested electronic states, one involving excitations of the metallic electrons, namely, the HE states, and the other concerned with charge transfer (CT) to the adsorbate antibonding sigma* orbital. Dissociation of H-2 thus takes place by transitions from the former to the latter. Quantum dynamics simulations on the diabatic CT states suggest rapid dissociation of H-2, while no such dissociation occurs on diabatic HE states. Our research provides a clear physical picture of photoinduced H-2 dissociation on Au clusters, which has important implications in plasmonic facilitated photocatalysis.