The catalyst layer (CL) in the polymer electrolyte membrane fuel cell (PEMFC) has not been explored in detail due to its complexities and difficulties associated with accessing it. It is important to understand water ingress and egress at the CL as it offers potential for water management by manipulating the evaporation rate. A technique for in situ visual characterization of the CL is presented. This is accomplished by designing and fabricating a catalyst-visible operational fuel cell and developing a microvisualization system. The dynamics of microdroplets on the CL surface (including formation, growth, coalescence, and removal) were visualized in an operating PEMFC. The liquid water behavior at the interface of the CL and the gas diffusion layer (GDL) were shown to promote the periodic droplet reemergence on the GDL surface in the flow channels. Mechanisms of water condensation and transport within the CL pores are discussed with respect to pore architecture and wetting properties. It has been shown that reduction of pore size and CL thickness alleviates flooding therein and promotes better catalyst utilization. Evaporation was identified as one of the distinguishing mechanisms of the CL, and one of the future challenges will be to control this mechanism. The experimental results should prove useful in clarifying the role of the CL in water management, and in refining models used to optimize PEMFC performance.