Free electrons in a polar liquid can form a bound state via interaction with the molecular environment. This so-called hydrated electron state in water is of fundamental importance, e.g., in cellular biology or radiation chemistry. Hydrated electrons are highly reactive radicals that can either directly interact with DNA or enzymes, or form highly excited hydrogen (H∗) after being captured by protons. Here, we investigate the formation of the hydrated electron in real-time employing extreme ultraviolet femtosecond pulses from a free electron laser, in this way observing the initial steps of the hydration process. Using time-resolved photoelectron spectroscopy we find formation timescales in the low picosecond range and resolve the prominent dynamics of forming excited hydrogen states.