Periodic density-functional theory calculations at the single-molecule level were used to study dissociation of water on ultrathin MgO films with varying thickness deposited on the Ag(100) surface. The enhanced chemical activity for water dissociation on MgO/Ag(100) originates from the greater stability of dissociated products, which is due in turn to the strong hybridization of their electronic states at the oxide-metal interface. Our results provide insights into the superiority of the monolayer MgO film surface over the bulk surface and the use of the film thickness to control heterogeneous catalysis in water dissociation.