We use new laboratory measurements of the absorption properties of water vapor to dramatically revise theoretical predictions of the concentrations of spectrally active trace gases in early-Earth like exoplanet atmospheres, and eliminate a key O2 false positive scenario. We study the photochemistry of abiotic, habitable planets with anoxic CO2-N2 atmospheres. Such worlds are representative of early Earth, Mars and Venus, and analogous exoplanets. H2O photodissociation controls the atmospheric photochemistry of these worlds through production of reactive OH, which dominates the removal of atmospheric trace gases. The near-UV (NUV; >200 nm) absorption cross-sections of H2O were previously unmeasured at habitable temperatures (< 373 K). We present the first-ever measurements of NUV H2O absorption at 292 K, and show it to absorb orders of magnitude more than previously assumed. The enhanced OH production due to these higher cross-sections leads to efficient recombination of CO and O2, suppressing both by orders of magnitude relative to past predictions and eliminating the low-outgassing “false positive” scenario for O2 as a biosignature. Enhanced [OH] increases rainout of reductants to the surface, relevant to prebiotic chemistry, and may also suppress CH4 and H2. Overall, our work advances the state-of-the-art of photochemical models by providing crucial new H2O cross-sections, and suggests that detection of spectrally active trace gases like CO in rocky exoplanet atmospheres may be more challenging than previously considered. While we focus on CO2-rich worlds, our results are relevant to anoxic planets in general.