In this article, the presence and effects of polarization‐enhanced hydrogen bonding in 1,8‐dihydroxynaphthalene (1,8‐DHN) were investigated in detail through a series of experimental and computational studies. First, the conformation of 1,8‐DHN, and its ability to make intra‐ and intermolecular hydrogen bonds were investigated in solid state by X‐ray crystallography, in solution by NMR spectroscopy, and computationally by density functional theory. Second, equilibrium binding constants, which were determined by 31P‐NMR titration studies, demonstrated stronger complexation of Ph3PO with 1,8‐DHN compared to mono‐naphthol derivatives 8‐methoxy‐1‐naphthol and 1‐naphthol. In the final section, 1,8‐DHN was observed to be an effective catalyst for the Friedel‐Crafts‐type addition reaction of indoles to β‐nitrostyrenes, and a rationale for this catalytic activity was provided via computational studies. All the findings described in this work support the enhanced hydrogen bond donating ability of 1,8‐DHN due to polarization caused by the six‐membered intramolecular hydrogen bond present in its structure.