Bipolar membranes (BPMs) have recently received much attention for their potential to improve the water dissociation reaction (WDR) at their junction by utilizing catalysts. Herein, composite catalysts (Fe2O3@GO) comprising hematite nanoparticles (α‐Fe2O3) grown on 2D graphene oxide (GO) nanosheets are reported, which show unprecedentedly high water dissociation performance in the BPM. Furthermore, new catalytic roles in facilitating WDR at the catalyst–water interface are mechanistically elucidated. It is demonstrated that the partially dissociated bound water, formed by the strongly Lewis‐acidic Fe atoms of the Fe2O3@GO catalyst, helps the “ice‐like water” to become tighter, consequently resulting in weaker intramolecular OH bonds, which reduces activation barriers and thus significantly improves the WDR rate. Notably, Fe2O3@GO‐incorporated BPM shows an extremely low water dissociation potential (0.89 V), compared to commercially available BPM (BP‐1E, 1.13 V) at 100 mA cm−2, and it is quite close to the theoretical potential required for WDR (0.83 V). This performance reduces the required electrical energy consumption for water splitting by ≈40%, as compared to monopolar (Nafion 212 and Selemion AMV) membranes. These results can provide a new approach for the development of water dissociation catalysts and BPMs for realizing highly efficient water splitting systems.