On-site and on-demand photocatalytic methane conversion under ambient conditions is one of the urgent global challenges for the sustainable use of ubiquitous methane resources. However, the lack of microscopic knowledge on its reaction mechanism prevents the development of engineering strategies for methane photocatalysis. Combining real-time mass spectrometry and operando infrared absorption spectroscopy with ab initio molecular dynamics simulations, here we report key molecular-level insights into photocatalytic green utilization of methane. Activation of the robust C–H bond of methane is hardly induced by the direct interaction with photogenerated holes trapped at the surface of photocatalyst; instead, the C–H activation is significantly promoted by the photoactivated interfacial water species. The interfacial water hydrates and properly stabilizes hydrocarbon radical intermediates, thereby suppressing their overstabilization. Owing to these water-assisted effects, the photocatalytic conversion rates of methane under wet conditions are dramatically improved by typically more than 30 times at ambient temperatures (~300 K) and pressures (~1 atm) in comparison to those under dry conditions. This study sheds new light on the role of interfacial water and provides a firm basis for design strategies for non-thermal heterogeneous catalysis of methane under ambient conditions.