Water is the predominant medium for chemistry and biology, yet its role in determining how molecules respond to ultraviolet light is not well understood at the molecular level. Here, we combine gas-phase and liquid-microjet photoelectron spectroscopy to investigate how an aqueous environment influences the electronic structure and relaxation dynamics of phenol, a ubiquitous motif in many biologically relevant chromophores. The vertical ionization energies of electronically excited states are important quantities that govern the rates of charge-transfer reactions, and, in phenol, the vertical ionization energy of the first electronically excited state is found to be lowered by around 0.8 eV in aqueous solution. The initial relaxation dynamics following photoexcitation with ultraviolet light appear to be remarkably similar in the gas-phase and aqueous solution; however, in aqueous solution, we find evidence to suggest that solvated electrons are formed on an ultrafast time scale following photoexcitation just above the conical intersection between the first two excited electronic states.