Graphene oxide (GO) membrane has been synthesized on commercial polysulfone ultrafiltration membranes (Pore size: 17 nm) using the drop casting method followed by baking at 90 °C for 24 h. Baking resulted in the reduction of GO and removal of bulk water intercalated in the GO sheets. Deposited GO film showed high stability under shear stress variation. This work shows that water adsorption on the GO membrane determines its permeation performance. Despite the higher viscosity of isopropyl alcohol (IPA), its permeability was 7 times higher than water through the baked (“dry”) GO membranes, which were never contacted with water. However, IPA permeability of GO membranes dropped to 44% (of deionized water) when contacted with water (“hydrated” or “wet” GO membranes). Extensive size exclusion (rejection) studies with various dye and dendrimer molecules showed pore size reduced from 3.3 nm in the “dry” state to 1.3 nm in the “wet” state of GO membranes. FT-IR characterization of GO membrane suggested adsorption of water on the nanochannels of the active layer. Also, significant decay in flux was observed for water (82% of its initial flux) as compared to IPA (38% of its initial flux) for initially dry GO membranes.