St. Thomas Aquinas
“Water ought to be mingled with the wine which is offered in this sacrament. First of all on account of its institution: for it is believed with probability that our Lord instituted this sacrament in wine tempered with water according to the custom of that country: hence it is written (Prov. 9:5): ‘Drink the wine which I have mixed for you.’ Secondly, because it harmonizes with the representation of our Lord’s Passion: hence Pope Alexander I says (Ep. 1 ad omnes orth.): ‘In the Lord’s chalice neither wine only nor water only ought to be offered, but both mixed because we read that both flowed from His side in the Passion.’ Thirdly, because this is adapted for signifying the effect of this sacrament, since as Pope Julius says (Concil. Bracarens iii, Can. 1): ‘We see that the people are signified by the water, but Christ’s blood by the wine. Therefore when water is mixed with the wine in the chalice, the people is made one with Christ.’ Fourthly, because this is appropriate to the fourth effect of this sacrament, which is the entering into everlasting life: hence Ambrose says (De Sacram. v): ‘The water flows into the chalice, and springs forth unto everlasting life.'”
Source: St. Thomas Aquinas, Summa Theologica