Abstract: A novel, reagent-efficient spectrophotometric approach for detecting trace water in organic solvents is presented, exploiting competitive halogen bonding (XB) between the iodonium-based σ-hole donating diphenyliodonium triflate, the azo-dye methyl orange, and water molecules. Unlike conventional Karl Fischer titration, this strategy leverages the distinct spectroscopic response arising from preferential complexation of water molecules by the XB donor: UV-vis titration studies in acetonitrile reveal that water saturates the electrophilic σ-hole of the iodonium cation at concentrations up to ~70 equivalents, inhibiting dye coordination. Subsequent addition of diphenyliodonium triflate triggers a sharp, concentration-dependent chromogenic shift, signaling water depletion and formation of the iodonium cation∙∙∙methyl orange charge-transfer complex. This sequence—validated by 1H NMR titration and DFT calculations—enables the visual and spectroscopic identification of water. The study establishes a fundamental concept for moisture sensing, demonstrating operational simplicity and potential for dipstick adaptation. This XB-mediated strategy offers a promising foundation for the future development of alternative moisture detection tools for applications in synthesis, pharmaceuticals, and quality control.