We investigate the energetic stability and dissociation dynamics of water adsorption at the LaAlO3 surface of the n-type LaAlO3/SrTiO3 (LAO/STO) interface and its effect on the electronic properties of the interface by carrying out first-principles electronic structure calculations. In an ambient atmosphere at room temperature the configuration of 1 monolayer (ML) of water molecules including 3/4 ML of dissociated water molecules adsorbed at the surface is found to be most stable, whereas the configuration of 1 ML of dissociated water molecules is metastable. Water molecule dissociation induces an up-shift of the valence band maximum (VBM) of the LAO surface, reducing the gap between the VBM of the LAO surface and the conduction band minimum of the STO. For the LAO/STO interface with three LAO unit-cell layers, once the coverage of dissociated water molecules reaches 1/2 ML the gap is closed, the interface becomes metallic and the carrier density at the LAO/STO interface increases with increasing coverage of dissociated water molecules. Our findings suggest two ways to control the conductivity at the LAO/STO interface: (I) an insulator–metal transition by adsorbing an amount of water at the bare surface; (II) a carrier density change by the transition between the most stable and the metastable adsorption configurations for 1 ML coverage in an ambient atmosphere at room temperature.