We demonstrate using single molecule spectroscopy that inorganic CsPbI3 perovskite quantum dots (PQDs) undergo an irreversible, photoaccelerated reaction with water that results in a blue-shift of the photoluminescence (PL) and ultimately to complete quenching of the emission. We find that decomposition does not take place in the presence of oxygen alone but that it requires light and water. We also analyze the blinking for some stable PQDs and find a continuous distribution of emission states with a linear correlation between intensity and lifetime. We postulate that, in addition to charging and discharging processes, blinking arises from the activation and deactivation of nonradiative recombination centers in the PQDs.