Lithium indium chloride, Li3InCl6, is a promising solid-state electrolyte for all-solid-state batteries (ASSBs) due to its high room-temperature ionic conductivity and electrochemical stability. However, its sensitivity to atmospheric moisture leads to the formation of stable crystalline hydrates, which significantly affect both its electrochemical performance and crystal chemistry. In this study, temperature- and time-dependent in situ X-ray diffraction was employed to investigate the underlying mechanisms governing the hydration and dehydration processes of Li3InCl6 and its hydrated counterpart, Li3InCl6·xH2O (x > 2), by monitoring the associated structural transformations. The study reveals a two-step phase transition between the hydrated and dehydrated phases, with the identification of an intermediate phase, Li3InCl6·yH2O (1.5 < y < 2). Coupled Rietveld refinements of X-ray and neutron powder diffraction data elucidate the crystal structure of this intermediate hydrate, providing crucial insights into the reversible reaction mechanism of Li3InCl6. Understanding these hydration and dehydration processes is vital for optimizing the electrochemical performance and stability of Li3InCl6 in ASSBs applications.