Carbonation may potentially lead to corrosion of steel bars in reinforced concrete. This concern presents a major barrier against the implementation of sustainable low-clinker cementitious materials in the design of reinforced concrete structures. Various studies have documented the relationship between different equilibrium moisture states in carbonated concrete and the corrosion rate of the embedded steel. However, limited attempts were focused on visually observing the dynamic (time-dependent) behavior of moisture penetration into concrete and the related corrosion state and rate. Moreover, there is a lack of data on the local moisture state in the cementitious matrix in the steel-concrete interfacial zone. In this study, liquid water uptake in carbonated mortar was in-situ and over time monitored by neutron imaging. The corrosion state of embedded steel was monitored by means of electrochemical measurements. This combined experiment revealed that the arrival of the waterfront at the steel surface led to a sharp decrease of the steel potential. The corrosion rate increased from negligibly low values (<1 µm/year) to about 31 µm/year within a couple of minutes. Based on the neutron images, it is concluded that the moisture ingress through the concrete cover is locally affected by the heterogeneity of projected (depth-averaged) porosity distribution, and that large obstacles such as entrapped air have an effect. These observations were further confirmed by numerical simulation results of water transport, which also showed that liquid water permeability of the studied carbonated mortar determined by the inverse analysis is much higher than reported values in the literature. Overall, this study highlights the importance of considering the dynamic and coupled corrosion and moisture transport behavior during the periods which active corrosion can occur in carbonated concrete exposed to cyclic wetting/drying conditions.