The lithium-mediated system catalyzes nitrogen to ammonia under ambient conditions. Herein we discover that trace amount of water as an electrolyte additive─in contrast to prior reports from the literature–can effect a dramatic improvement in the Faradaic selectivity of N2 reduction to NH3. We report that an optimal water concentration of 35.9 mM and LiClO4 salt concentration of 0.8 M allows a Faradaic efficiency up to 27.9 ± 2.5% at ambient pressure. We attribute the increase in Faradaic efficiency to the incorporation of Li2O in the solid electrolyte interphase, as suggested by our X-ray photoelectron spectroscopy measurements. Our results highlight the extreme sensitivity of lithium-mediated N2 reduction to small changes in the experimental conditions.