Water embedded in the crystal structure of a solid hydrate may affect the functional properties of the material. A decisive step towards understanding the role of water in the restricted geometry is to unravel the arrangement and dynamics of water molecules. The paper attacks this issue using the example of NaBiO₃–based material containing at ambient conditions a mixture of dehydrated NaBiO₃ and hydrated NaBiO₃⋅nH₂O phase, with the latter being predominant. Inelastic neutron scattering and infrared spectroscopy are applied to explore the vibrations of water molecules for the hydrated phase in the initial state and during the release of water upon heating that eventually leads to a complete transformation to the dehydrated phase. The major peaks in the infrared spectra were assigned, particularly with the help of deuteration. Dynamic interaction of structurally equivalent water molecules was revealed from the analysis of water bending modes in infrared and Raman spectra. The change in the conformation of water molecules is discussed, as well as the deformation of matrix bonds during sample dehydration.