The reaction of C-2 with water and the possible subsequent reactions have been investigated using ab initio methods. Species involved in the reactions on both singlet and triplet potential energy surfaces were optimized at both Moller-Plesset correlation energy correction truncated at second-order (MP2) and quadratic configuration interaction including single and double substitution (QCISD) levels in conjunction with the 6-311++G** basis set. Single point calculations were performed using coupled cluster theory including single, double, and triple substitutions (CCSD(T)) in conjunction with the 6-311++G(d,pd) basis set with the geometry optimized at the MP2/6-311++G** level. On the basis of computational energetic results at the CCSD(T)/6-311++G(d,pd)//MP2/6-311++G** plus zero point energy correction level of theory the association reaction channel on the singlet surface dominates over the H-abstraction channel on both singlet and triplet surfaces. The most feasible reaction following the formation of association intermediate (CCOH2) is the intramolecular hydrogen migration leading to hydroxyethyne (HCCOH). Rearrangement of HCCOH can lead to several other isomer intermediates. Elimination of atomic and molecular hydrogen from HCCOH, CCOH2, and other isomer intermediates is also surveyed. The implication of our computational results regarding the reaction of C-2 with H2O in interstellar space and combustion process is discussed.