Zeolite-catalyzed C-C bond cleavage in alkanes is well-studied in the gas phase, but the influence of water remains largely unexplored despite its relevance in biomass ugrading. In this study, we investigate alkane cracking in the presence of water. To accurately capture the effects of long-range dispersive and electrostatic interactions among the cracking intermediates, aqueous solvent, and zeolite framework, we employed density functional theory (DFT) within a hybrid quantum mechanical and molecular mechanical (QM/MM) model, where the active site and reactant are described at the DFT level of theory, while the water and the zeolite framework far away from active site are described at the force field level of theory. In dry conditions, cracking is initiated by a Brønsted proton from the framework, resulting in the formation of CH4 & C3H7 during methyl and C2H4 & C2H5 during ethyl activation. However, in the presence of small amounts of water, the Brønsted proton delocalizes to form a mobile acid site H5O2+ (Zundel ion) that not only enables C-C bond cleavage but also promotes alcohol formation (propanol and ethanol) over alky intermediates.To elucidate the influence of water on the electrostatic reaction environment we developed an explicit solvation scheme for porous zeolites (called eSZS). Given the high temperatures (673K) and low water densities simulated (500 kg/m3 in bulk water), our eSZS predicts only a small endergonic solvent effect for butane adsorption (0.053 ± 0.018). However, at lower temperatures (298K) and higher water densities (997 kg/m3 in bulk water), a significant solvent effect is observed (0.400 ± 0.049) for butane adsorption, although cracking cannot occur at such low temperatures. Hence, the calculated small endergonic solvent effect at 673K is likely an artifact of the relatively lower liquid water densities at supercritical water conditions.