Among all catalytic natural gas valorization processes, methane dehydroaromatization (MDA) still has a great potential to be utilized at an industrial level. Although the use of Mo/H-ZSM-5 as an MDA catalyst was first reported almost three decades ago, the process is yet to be industrialized, because of its inherent challenges. In order to improve the overall catalytic performance and lifetime, the co-feeding of water constitutes a promising option, because of its abundance and nontoxicity. Although water’s (limited) positive influence on catalyst lifetime has earlier been exhibited, the exact course of action (like mechanism or the water effect on active sites) is yet to be established. To bridge this knowledge gap, in this work, we have performed an in-depth investigation to elucidate the effects of water co-feeding over a well-dispersed Mo/H-ZSM-5 catalyst by using an array of advanced characterization techniques (nuclear magnetic resonance (NMR), electron paramagnetic resonance (EPR), X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), thermogravimetry–temperature-programmed oxidation/mass spectroscopy (TG-TPO/MS), scanning transmission electron microscopy (STEM), N2 physisorption, Raman spectroscopy, inductively coupled plasma–optical emission spectroscopy (ICP-OES)). Our results demonstrate that the addition of water results in the occurrence of steam reforming (of both coke and methane) in parallel to MDA. Moreover, the presence of water affects the reducibility of Mo sites, as corroborated with computational analysis to examine the state and locality of Mo sites under various water levels and transformation of the catalyst structure during deactivation. We anticipate that our comprehensive study of the structure–function relationship on Mo/H-ZSM-5 under humid MDA conditions will be beneficial for the development of future methane valorization technologies.