We study the role of hydration water in the dynamic transition of low-hydrated proteins upon pressurization found recently (Meinhold, L.; Smith, J.C. Phys. ReV. E 2005, 72, 061908). Clustering and percolation of water in the hydration shells of protein molecules in crystalline Staphylococcal nuclease are analyzed at various pressures. The number of water molecules in the hydration shell increases and the hydrogen-bonded network of hydration water spans with increasing pressure. The dynamic transition of protein occurs when the spanning water network exists with the probability of about 50% and hydration water shows large density fluctuations. Formation of a spanning water network upon pressurization promotes protein dynamics as in the case of the dynamic transition with increasing hydration. Properties of hydration water in various thermodynamic states and their influence on biological function are discussed.