During Cassini's initial orbit, we observed a dynamic magnetosphere composed primarily of a complex mixture of water-derived atomic and molecular ions. We have identified four distinct regions characterized by differences in both bulk plasma properties and ion composition. Protons are the dominant species outside about 9 RS (where RS is the radial distance from the center of Saturn), whereas inside, the plasma consists primarily of a corotating comet-like mix of water-derived ions with ~3% N+. Over the A and B rings, we found an ionosphere in which O2+ and O+ are dominant, which suggests the possible existence of a layer of O2 gas similar to the atmospheres of Europa and Ganymede.