The dynamics of water in polyethylene oxide (PEO)/LiCl solution has been studied with quasielastic neutron scattering experiments and molecular dynamics (MD) simulations. Two different time scales of water diffusion representing interfacial water and bulk water dynamics have been identified. The measured diffusion coefficient of interfacial water remained 5–10 times smaller than that of bulk water, but both were slowed by approximately 50% in the presence of Li+. Detailed analysis of MD trajectories suggests that Li+ is favorably found at the surface of the hydration layer, and the probability to find the caged Li+ configuration formed by the PEO is lower than for the noncaged Li+−PEO configuration. In both configurations, however, the slowing down of water molecules is driven by reorienting water molecules and creating water-Li+ hydration complexes. Performing the MD simulation with different ions (Na+ and K+) revealed that smaller ionic radius of the ions is a key factor in disrupting the formation of PEO cages by allowing spaces for water molecules to come in between the ion and PEO.