This work provides a comprehensive study on the pore structure and performance of a coated microporous layer (MPL) and a novel sheet MPL for the polymer electrolyte membrane (PEM) fuel cell. We characterize the MPLs using micro-computed tomography, illustrating that the degree and unevenness of MPL intrusion are substantially reduced with the sheet MPL. In-operando X-ray synchrotron imaging reveals a highly surprising observation, whereby the sheet MPL facilitates superior electrochemical performance despite exhibiting higher quantities of liquid water accumulation within the GDL compared to the coated MPL. To further explain this counter-intuitive performance of the sheet MPL, liquid water transport within the GDL is simulated via pore network modeling, and the oxygen diffusion resistance under partially saturated conditions for each GDL is calculated. Under partially saturated conditions, the oxygen transport resistance of the MPL-substrate transition region dominates the overall performance of the PEM fuel cell, and we attribute the superior performance of the sheet MPL to the 10% lower oxygen diffusion resistance in the transition region compared to that of the conventional coated MPL. This work highlights how the interplay between liquid water saturation combined with partially saturated oxygen diffusion resistance must be considered in GDL design for next generation PEM fuel cells.