Mechanisms of excited-state intramolecular proton transfer (ESIPT) of 1,2-dihydroxyanthraquinone (ALR) in ethanol solvent and binary solvent of water and ethanol are investigated using the density functional theory and time-dependent density functional theory. The intramolecular hydrogen bond is found to be reinforced in the excited state based on the bond lengths, bond angles, and infrared vibrational spectra of relevant group. The reinforcement of intramolecular hydrogen bond is attributed to the charge transfer in the excited state, which leads the ESIPT to form a keto isomer. The absorption and fluorescence spectra of ALR in binary solvent with different water percentage are obtained and demonstrate the inhibition effect of water on the ESIPT process, which are consistent with the experimentally observation. Furthermore, more water molecules are considered near the carbonyl group and hydroxyl group related to the intramolecular proton transfer to form intermolecular hydrated hydrogen bond with ALR for clarifying the block mechanism of water on ESIPT. The potential energy curves, frontier molecular orbitals, and NBO analysis are calculated for the several complexes in the ground and excited states. The results show that the interrupt role of water on the ESIPT originated from the forming of hydrated hydrogen bond between the carbonyl oxygen atom and the water molecule, which weakens the intramolecular hydrogen bond associated with proton transfer, increases the energy barrier of ESIPT, and thus precludes the transition of ALR-E to ALR-K in the excited state. In addition, the weakening of intramolecular hydrogen bonds is increased as the water molecule number increases. So the inhibitory effect is enhanced by the water quantity, which reasonably explains the experimental attenuating of keto emission spectra as the water percentage in binary solvent increases.