Luminescent silver clusters (AgCLs) stabilized inside partially Ag exchanged Na LTA zeolites show a remarkable reversible on-off switching of their green-yellowish luminescence that is easily tuned by a hydration and dehydration cycle, making them very promising materials for sensing applications. We have used a unique combination of photoluminescence (PL), UV-visible-NIR Diffuse Reflectance (DRS), X-ray absorption fine structure (XAFS), Fourier Transform-Infrared (FTIR) and electron spin resonance (ESR) spectroscopies to unravel the atomic-scale structural changes responsible for the reversible optical behavior of the confined AgCLs in LTA zeolites. Water coordinated, diamagnetic, tetrahedral AgCLs [Ag4(H2O)4]2+ with Ag atoms positioned along the axis of the sodalite six-membered rings are at the origin of the broad and intense green-yellowish luminescence in the hydrated sample. Upon dehydration, luminescent [Ag4(H2O)4]2+ clusters are transformed into non-luminescent (dark), diamagnetic, octahedral AgCLs [Ag6(OF)14]2+ with Ag atoms interacting strongly with zeolite framework oxygen (OF) of the sodalite four-membered rings. This highly responsive on-off switching reveals that besides quantum confinement and molecular-size, coordinated water and framework oxygen ligands strongly affect the organization of AgCLs valence electrons and play a crucial role in the opto-structural properties of AgCLs.