The salt bridge formation and stability in the terminated lysine-glutamate dipeptide is investigated in water clusters of increasing size up to limit of bulk water. Proton transfer dynamics between the acidic and basic side chains is described by DFT-based Born-Oppenheimer molecular dynamics simulations. While the desolvated peptide prefers to be in its neutral state, already addition of single water molecule can trigger proton transfer from Glu to Lys, leading to a zwitterionic salt bridge state. Upon adding other water molecules we find that stabilization of the zwitterionic state critically depends on the number of additional hydrogen bonds between side chain termini, the water molecules, and the peptidic backbone. Employing classical MD simulations for larger clusters, we observed that the salt bridge weakened upon additional hydration. Consequently, long-lived solvent shared Glu-Lys ion pairs are observed for approx. 30 water molecules while solvent separated ion pairs are found when at least 40 or more water molecules are hydrate the dipeptide. These results have implications for the formation and stability of salt bridges at partially dehydrated surfaces of aqueous proteins.