Have you tried to run in water? It's much harder than actually running. The same principle applies here. The whole gun is under-water therefore the recoil will be diminished.

All a gun does to fire a round is have a small pin hit the back of the bullet with a small amount of force. This creates a reaction with the gunpowder mix inside the bullet casing forcing the bullet itself to accelerate out of it's casing, along the barrel and then move somewhere else.

The reason guns can fire underwater is because gunpowder is an oxidizer and therefore does not need oxygen to operate. You can fire it in space, underwater. Anywhere there is no oxygen it still can. Water, however, is different from space in that it slows the bullet down considerably because it has more mass. This is also why you cannot fire high velocity bullets into water because the extreme amount of velocity they contain shatters the bullet on impact. This isn't the case with small-arms guns (like a pistol, depending on model) as they fire smaller rounds at a smaller velocity.