The first photoabsorption band of water around 8 eV:is studied with the molecular dynamics computer simulation technique under ambient and supercritical conditions. By employment of the polarizable TAB/ 10D potential model (Bursulaya, B. D.; Jeon,J.; Zichi,;D. A.; Kim, H. J. J. Chem. Phys. 1997, 108, 3286), the electronic structure variations of the ground and low-lying excited states of water with solvation are explicitly accounted for via the truncated adiabatic -basis-set representation. Compared with the (X) over tilde(1)A(1) --> (A) over tilde(1)B(1) transition in vacuum, the absorption spectrum;tends:to be blue-shifted and broadened in solution, consonant with experiments. It is found that both the solvation and Rydbergization destabilizations of the first excited states of individual water molecules, compared with their respective ground states, contribute to the blue shift, while the line broadening arises from the inhomogeneous distribution of their solvation environments. Also there is significant electronic mixing of the excited states, induced by solvation. As a result, their dipole character varies dramatically with the fluctuating solvation environment as well as with the thermodynamic conditions, e.g., density. Its potential consequences for the Urbach tail of the spectrum observed in condensed phases are discussed. Also new insights into multiphoton ionization of water from the excited-state electronic perspective are presented.