Step 1: Recall the formula of plaster of Paris.
Plaster of Paris (POP) is chemically calcium sulphate hemihydrate — CaSO4·½H2O.
Step 2: Reaction with water.
When POP is mixed with water, it reacts to form gypsum (calcium sulphate dihydrate):
\[
\text{CaSO}_4·\tfrac{1}{2}\text{H}_2\text{O} + \tfrac{3}{2}\text{H}_2\text{O} \rightarrow \text{CaSO}_4·2\text{H}_2\text{O}
\]
Step 3: Conclusion.
Hence, plaster of Paris sets and hardens by absorbing water to form gypsum.