Methylammonium lead iodide (CH₃NH₃PbI₃) based solar cells have shown impressive power conversion efficiencies of above 20%. However, the microscopic mechanism of the high photovoltaic performance is yet to be fully understood. Particularly, the dynamics of CH₃NH₃⁺ cations and their impact on relevant processes such as charge recombination and exciton dissociation are still poorly understood. Here, using elastic and quasi-elastic neutron scattering techniques and group theoretical analysis, we studied rotational modes of the CH₃NH₃⁺ cation in CH₃NH₃PbI₃. Our results show that, in the cubic (T > 327 K) and tetragonal (165 K < T < 327 K) phases, the CH₃NH₃⁺ ions exhibit four-fold rotational symmetry of the C–N axis (C₄) along with three-fold rotation around the C–N axis (C₃), while in the orthorhombic phase (T < 165 K) only C₃ rotation is present. At around room temperature, the characteristic relaxation times for the C₄ rotation are found to be τ_C4 ≈ 5 ps while for the C₃ rotation τ_C3 ≈ 1 ps. The T-dependent rotational relaxation times were fitted with Arrhenius equations to obtain activation energies. Our data show a close correlation between the C₄ rotational mode and the temperature dependent dielectric permittivity. Our findings on the rotational dynamics of CH₃NH₃⁺ and the associated dipole have important implications for understanding the low exciton binding energy and a slow charge recombination rate in CH₃NH₃PbI₃ which are directly relevant for the high solar cell performance.