Plasma–liquid interactions have gained escalated interests over the last decade due to their potentials in many applications. The simultaneous generation of physicochemical phenomena of interest promotes itself to the top of the promising technologies for liquid processing. Here, we study the physics of a microwave plasma jet (MWPJ) submerged into water and its feasibility to wastewater treatment. We investigate the plasma and bubble dynamics using high-speed imaging. The effects of the argon flow rate, additive gas, and microwave power on the dynamics are examined highlighting the retreating behaviors of plasma channels due to the losses of electrons and power caused by nearby water surface. The addition of N (< 5%) to Ar flow results in an oscillatory motion of the foremost edge of the plasma channel. We characterize the submerged MWPJ using a time- and space-averaged optical emission spectroscopy. We found the dominant OH (A–X) molecular band and atomic Ar lines with pure Ar flow indicating the effective dissociation of water. Meanwhile, the addition of N leads to an intense emission of NH (A–X) molecular band. Finally, we assess the submerged MWPJ as a viable method for water purification based on the degradation of methylene blue (popular model compound). We find a significant improvement in the efficiency by adding 1–3% of N to the Ar, which should be attributed to a combined effects of NH radicals, having high redox potential, and the backward reactions of HO to form OH radicals with NO and NO.