The solvent-solute interface of a biomolecule is a dynamic but yet highly structured domain that links a chemically diverse solute surface to the chemically homogeneous bulk aqueous phase. The role of the resulting intermediate domain, i.e. the "hydration shell", in regulating DNA structure and recognition has been addressed here by time-resolved infrared spectroscopy. A highly reproducible automated hydration pulse regime was established and implemented for attenuated total reflectance (ATR) Fourier transform infrared (FTIR) spectroscopy to monitor the structural response of DNA to an incremental growth of its hydration shell on its intrinsic time scale of seconds. The transition from the crystallographically defined BI to the BII substate of B-DNA was found to be driven by the increase of water disorder upon growth of the hydration shell, derived from the water OH-stretching absorption frequency and band width changes. 2D correlation analysis was used to identify different water clusters from the temporal behaviour of their water OH stretching frequencies. The results show that BII-stabilizing structural constraints are exerted by strong water-DNA H-bonds in the grooves of B-DNA and are relieved when the groove-bound water merges into a contiguous hydration shell with the less H-bonded PO2- -solvation sphere at ~14 water molecules per DNA phosphate. The H-bond imbalance at the disjunct hydration sites is split symmetrically around the average H-bond strength of bulk water. Thus, merging into a contiguous hydration shell proceeds at little enthalpic cost and homogeneous connectivity to the outer bulk-like H-bond network, such that alteration in the network distant from the DNA can regulate the BI-BII transition in a cooperative manner. The water connectivity is disrupted by DNA-binding peptides. Remarkably, the data show that the replacement of hydration shell water upon ligand biding is crucial in conferring substate specific recognition by peptides that have little intrinsic structural preference. The antibacterial peptide indolicidin secreted from bovine neutrophils dehydrates the non-PO2--bound hydration sites, thereby rendering the unstructured peptide highly specific for the BI state with vibrational signature almost identical to the bacterial minor groove binder netropsin. The proposed dominant role of hydration shell water for DNA conformation was challenged by studying the competing effect of structured water in the coordination-shell of the lanthanide Eu3+ on water structure in the DNA hydration shell. Whereas no effect is seen at low hydration, a hydrogen-like phase is formed at a stoichiometric ratio of Eu3+ :DNA:H2O of 1:10:140, characterized by a strong increase of the molar volume of hydration water. This novel phase appears attractive for lanthanide and possibly actine separation approaches based on biomolecular coordination.