Biology takes place in crowded, heterogeneous environments, and it is therefore essential to account for crowding effects in our understanding of biophysical processes at the molecular level. Comparable to the cytosol, proteins occupy approximately 30% of the plasma membrane surface; thus, crowding should have an effect on the local structure and dynamics at the lipid-water interface. Using a combination of ultrafast two-dimensional infrared spectroscopy and molecular dynamics simulations, we quantify the effects of membrane peptide concentration on the picosecond interfacial H-bond dynamics. The measurements reveal a nonmonotonic dependence of water orientation and dynamics as a function of transmembrane peptide:lipid ratio. We observe three dynamical regimes: a "pure lipid-like" regime at low peptide concentrations, a bulk-like region at intermediate peptide concentrations where dynamics are faster by ∼20% compared to those of the pure lipid bilayer, and a crowded regime where high peptide concentrations slow dynamics by ∼50%.