Photoelectrochemical (PEC) cells containing photocathodes based on functionalized NiO show a promising solar-to-hydrogen conversion efficiency. Here, we present mechanistic understanding of the photoinduced charge transfer processes occurring at the photocathode/electrolyte interface. We demonstrate via advanced photophysical characterization that surface hydroxyl groups formed at the NiO/water interface not only promote photoinduced hole transfer from the dye into NiO, but also enhance the rate of charge recombination. Both processes are significantly slower when the photocathode is exposed to dry acetonitrile, while in air an intermediate behavior is observed. These data suggest that highly efficient devices can be developed by balancing the quantity of surface hydroxyl groups of NiO, and presumably of other p-type metal oxide semiconductors.