Ultrafast dynamics of OH stretching excitations of H2O confined in dioleoylphosphatidylcholine (DOPC) reverse micelles, a phospholipid model system, are studied in femtosecond pump-probe experiments. Measurements in a wide range of hydration show that spectral diffusion within the OH stretching band accelerates substantially with increasing water content. Concomitantly, the OH stretching lifetime decreases from approximately 500 fs at a 1:1 ratio of water and DOPC molecules (w(0) = 1) to 300 fs for large water pools (ratio 16:1, w(0) = 16). Two-color pump-probe studies mapping the ultrafast OH bending response after OH stretch excitation demonstrate that the relaxation pathway of the OH stretch vibration involves the OH bending mode. After OH stretch relaxation at high hydration levels, vibrational excess energy is randomized within the water pool and then transferred to the surrounding solvent.