In addition to the useful physical properties of biphasic systems (easy separation of products and catalyst, facile catalyst reuse) aqueous media may largely influence the chemistry of catalytic reactions. By appropriate pH manipulations, the selectivity of hydrogenation of unsaturated aldehydes with ruthenium(II) phosphine catalysts was controlled from the exclusive formation of saturated aldehydes to that of unsaturated alcohols. Phase separation of the constituents of catalytic systems eliminated substrate inhibition (hydrogenation of aldehydes) and helped formation of catalytically active species ([RhH(PPh(3))(3)] from [RhCl(PPh(3))(3)] in hydrogenation of acetophenone). The reactive nature of H(2)O was revealed by fast catalysis of H/D exchange and deuteration processes.