A [(RhCp)-Cp-III*]-catalyzed directed C-H hydroxylation of 2-arylpyridines is described (Cp*=1,2,3,4,5-pentamethylcyclopenta-2,4-dienyl), in which the combination of [(RhCp*Cl-2)(2)]/AgF, PhI(OPiv)(2), and water is used an effective catalytic system. According to our mechanistic studies, including O-18-labeling experiments and X-ray crystallographic analysis of an intermediate Rh complex, we demonstrate that water and PhI(OPiv)(2) are required for Rh catalysis as the hydroxy source and the oxidant, respectively.