The effect of water on the catalytic oxidation of 1,4-butanediol in methanol over Au/TiO2 has been investigated by catalytic reaction studies and NMR diffusion and relaxation studies. The addition of water to the dry catalytic system led to a decrease of both conversion and selectivity towards dimethyl succinate. Pulsed-field gradient (PFG)-NMR spectroscopy was used to assess the effect of water addition on the effective self-diffusivity of the reactant within the catalyst. NMR relaxation studies were also carried out to probe the strength of surface interaction of the reactant in the absence and presence of water. PFG-NMR studies revealed that the addition of water to the initial system, although increasing the dilution of the system, leads to a significant decrease of effective diffusion rate of the reactant within the catalyst. From T1 and T2 relaxation measurements it was possible to infer the strength of surface interaction of the reactant with the catalyst surface. The addition of water was found to inhibit the adsorption of the reactant over the catalyst surface, with the T1/T2 ratio of 1,4-butanediol decreasing significantly when water was added. The results overall suggest that both the decrease of diffusion rate and adsorption strength of the reactant within the catalyst, due to water addition, limits the access of reactant molecules to the catalytic sites, which results in a decrease of reaction rate and conversion.