The unique effects of internal hydroxy groups in chiral rhodium(I) diphosphane catalysts on the asymmetric hydrogenation of functionalized olefins are summarized. In the first part, effects caused by the additional functional group on the rate and enantioselectivity of the catalytic reaction with RhI‐diphosphane complexes are shown. For comparison, the results obtained with relevant parent catalysts or complexes bearing alkoxy groups are also considered. Subsequently, mechanistic studies which may explain the rate‐reducing as well as the ee‐enhancing effect of hydroxy groups are discussed in detail. Furthermore, the subtle competitive interplay between the hemilabile behaviour of hydroxy groups and their ability to establish hydrogen bonding within the framework of the ligand or between the ligand and the substrate is shown. Proof is given that conformationally flexible ligands bearing hydroxy groups can respond to varying electronic features of the catalytic centre and the substrate. Finally, the beneficial effect of hydroxy groups on the fine‐tuning of diphosphane catalysts of low performance is demonstrated for some examples. This modification resulted in catalysts which afforded the chiral hydrogenation product in up to 99% ee.