Recent studies have demonstrated that the physical properties of water treated with non-thermal plasma, or plasma-activated water (PAW), significantly differ from those of distilled water. For example, contrary to expectation, the viscosity of PAW becomes lower than that of distilled water at certain temperatures. This study developed a model to explain these differences by combining the two-state model of ordinary water, which describes water as a combination of nano-crystalline clusters and amorphous, free-floating molecules, using the Debye–Huckel theory for a fluid containing ions. A model for the viscosity of PAW was then developed from the general model. It explains how PAW has a lower viscosity than distilled water as the temperature decreases and why this effect is stronger than the colligative effect for ideal solutions. Finally, the viscosity model is compared to the experimental measurements of PAW treated with gliding arc plasma, showing that the data match the predicted values quite well. The model of PAW developed here can be used to understand other physical properties beyond viscosity, such as the surface tension, contact angle, electric conductivity, heat capacity, isothermal compressibility, and density, potentially facilitating new applications of PAW.