Environmentally sound composites reinforced with natural fibers or particles interest many researchers and engineers due to their great potential to substitute the traditional composites reinforced with glass fibers. However, the sensitivity of natural fiber-reinforced composites to water has limited their applications. In this paper, wood powder-reinforced polypropylene composites (WPCs) with various wood content were prepared and subjected to water absorption tests to study the water absorption procedure and the effect of water absorbed in the specimens on the mechanical properties. Water soaking tests were carried out by immersion of composite specimens in a container of distilled water maintained at three different temperatures, 23, 60 and 80 °C. The results showed that the moisture absorption content was related to wood powder percentage and they had a positive relationship. The transfer process of water molecules in the sample was found to follow the Fickian model and the diffusion constant increased with elevated water temperature. In addition, tensile and bending tests of both dry and wet composite samples were conducted and the results indicated that water absorbed in composite specimens degraded their mechanical properties. The tensile strength and modulus of the composites reinforced with 15, 30, 45 wt % wood powder decreased by 5.79%, 17.2%, 32.06% and 25.31%, 33.6%, 47.3% respectively, compared with their corresponding dry specimens. The flexural strength and modulus of the composite samples exhibited a similar result. Furthermore, dynamic mechanical analysis (DMA) also confirmed that the detrimental effect of water molecules on the composite specimens.