Polyvinylpyrrolidone (PVP) has been successfully used as the cathode interfacial layer (CIL) in organic solar cells (OSCs) for work function (WF) modification. However, detailed insight into the effect of a PVP interlayer on the physicochemical properties of the indium tin oxide (ITO) electrode in inverted OSCs (I‐OSCs) is still largely absent. Herein, the ITO/PVP interface is investigated by photoelectron spectroscopy and the mechanisms for the energy level alignment of PVP on different substrates in general are unraveled. The results indicate that the dipole formation that reduces the WF is driven by not only the directional intrinsic molecular dipole moments associated with the γ‐lactam of PVP, but also an additional dipole step with the same direction created by the image charges in the contacting (semi‐)conductor layer. In addition, high‐performance inverted OSCs (I‐OSCs) are achieved by introducing a self‐assembled ultrathin PVP layer using a simple immersion method. This work provides enhanced understanding of the PVP‐based CIL and demonstrates its great potential in I‐OSC fabrication, which can pave the way to simplified manufacturing of low‐cost and large‐area devices in organic electronic technologies.