Abstract: A discharge ignited by an AC power source in contact with deionized water as one of the electrodes is investigated. Immediately after initiation, the discharge exhibits a unique phenomenon: the gas-phase discharge is extended into the liquid. Later, a cone-like structure is observed at the liquid surface. Synchronous monitoring of current–voltage characteristics and liquid properties versus time suggests that the discharge shapes are functions of the liquid properties. The spatio-temporal profiles indicate the potential effects of water, ambient air impurities, and metastable argon on the discharge chemistry. This becomes more obvious near the liquid surface due to increasing production of various transient reactive species such as centerdot OH and NO centerdot. Moreover, it is revealed that thermalization of the rotational population distributions of the rotational states (N^\prime \leqslant 6,J^\prime \leqslant 13/2) in the Q1 branch of the OH \left(\rmA^2\rm\Sigma ^+,\upsilon ^\prime =0\to \rmX^2\rm\Pi _3/2,\upsilon ^\prime\prime =0\right) band ro-vibrational system is influenced by the humid environment near the liquid surface. In addition, the transient behaviors of instantaneous concentrations of long-lived reactive species (LRS) such as H2O2, \rmNO_\rm2^-, and \rmNO_3^- are observed with lengthening the discharge time. The production of multiple transient and LRS proposes AC excited gas–liquid argon discharge as a potential applicant in industrial wastewater cleaning, clinical medicine, and agriculture.