The image of a bone-dry surface in the Moon's non-polar regions impinged by the Apollo missions was changed by the detection of widespread absorption near 3 µm in 2009, interpreted as a signature of hydration. However, debates persist on the relative contribution of molecular water (H2O) and other hydroxyl (OH) compounds to this hydration feature, as well as the cause of the potential temperature-dependence of the OH/H2O abundance. Resolving these debates will help to estimate the inventory of water on the Moon, a crucial resource for future space explorations. In this study, we measured the abundance and isotope composition of hydrogen within the outermost micron of Chang'e-5 soil grains, collected from the lunar surface and from a depth of 1 m. These measurements, combined with our laboratory simulation experiments, demonstrate that solar-wind-induced OH can be thermally retained in lunar regolith, with an abundance of approximately 48–95 ppm H2O equivalent. This abundance exhibits small latitude dependence and no diurnal variation. By integrating our results with published remote sensing data, we propose that a high amount of molecular water (∼360 ± 200 ppm H2O) exists in the subsurface layer of the Moon's non-polar regions. The migration of this H2O accounts for the observed latitude and diurnal variations in 3 µm band intensity. The inventory of OH and H2O proposed in this study reconciles the seemingly conflicting observations from various instruments, including infrared/ultraviolet spectroscopies and the Neutral Mass Spectrometer (NMS). Our interpretation of the distribution and dynamics of lunar hydration offers new insights for future lunar research and space missions.