The fundamental role of water in anion-promoted reactions carried out under both liquid-liquid and solid-liqiud phase-transfer catalysis (LL- and SL-PTC:, respectively) conditions is reviewed. In particular, the hydration effect on the quaternary onium salt extraction constants, anion selectivity coefficients, and anion reactivity under LL-PTC conditions is reported. The effect of added water on SL-PTC reaction rates is also included. In addition, guidelines for optimizing the amount of water in the application of PTC to organic synthesis are proposed.