Recent rhyolite eruptions on Earth have demonstrated their capacity to produce a multitude of hazards, including ash formation lasting months and impacting the large reaches of the southern hemisphere. Nevertheless, the underlying mechanisms driving these eruptions are not yet fully understood. Magmatic volatiles, especially H2O, dictate whether volcanic eruptions proceed explosively or effusively. Experimental evidence for the role played by H2O in driving explosive fragmentation is rare, in particular in the eruption of rhyolitic magma. Here we show that when hydrous rhyolitic obsidians from Chaitén Volcano (Chile) are experimentally heated above their glass transition temperatures at ambient 1 atm-conditions, two different behaviors result, depending on starting H2O concentration and temperature: obsidians vesiculate to stable or quasi-steady state foams when H2O is ≤1 wt.% for a wide range of temperatures (728–1032°C), but will explode within just tens of seconds (<30 s) of the foaming process when H2O is 1.4 wt.% and T is >874°C. Explosive activity occurs above Chaitén's estimated eruption temperature but, for lower temperatures, only foaming occurs. Whether a foaming sample remains coherent or explodes depends on two interrelated factors, the Peclet number (Pe), a dimensionless ratio of diffusive and viscous timescales, and the timescale or rate of decompression, which is dictated in part by the H2O-vapor pressure gradient between bubbles and atmosphere. At or above 1.4 wt.% H2O, and for a range of permissible Chaitén eruption temperatures (∼780–825°C), Pe is large (>10), meaning viscous deformation aiding vapor expansion is the dominant mode of growing bubbles. Consequently, vesiculation can proceed rapidly due to high initial overpressure and low melt viscosity, until the point is reached that the melt deforms at a rate greater than its relaxation rate, resulting in fragmentation. Below 1.4 wt.% H2O and for temperatures equal to or lower than Chaitén's eruption, decompression and deformation rates, inferred from experimental clast expansion and bubble growth behavior, are at least an order of magnitude smaller than the explosive cases, which is insufficient for critical melt-rupturing. Pe estimations highlight the first order influence of temperature and H2O content on physical degassing behavior. Since the starting H2O content and temperature dictate many the parameters that govern bubble growth—pressure gradient, melt viscosity, and chemical diffusivity—our experiments shed light on what limits fragmentation in natural eruptions and offer an alternative explanation for H2O contents measured in Plinian fall deposits from Chaitén and other rhyolite centers. In essence, pyroclastic obsidian H2O contents could reflect temperature and P-H2O limitations on fragmentation. Furthermore, since foam expansion under low-P, high-T-H2O conditions can foster strain rates in excess of the melt's relaxation rate and thus drive fragmentation, we contend that, in addition to rapid magma ascent (and high magma supply rates), rapid clast expansion under low pressure conditions may also be important for explosive magma fragmentation.