Biodiesel is regarded as a significant alternative fuel to petrodiesel due to its excellent combustion features and renewable character. The water content in the reactant mixtures needs to be considered so as to retard the conversion rate and it is suggested to be kept as low as possible. The fluid characteristics of biodiesel might be affected by initial water content; however, the optimum ratio of water content added to raw oil for achieving superior fluid characteristics of biodiesel has not yet been studied. Hence, this study empirically investigated the influences of the initial water content added to raw feedstock oil on the fluid characteristics of biodiesel. The experimental results show that an adequate amount of water content in the reactant mixture was found effective for improving the transesterification reaction and, in turn, the fluid characteristics. The biodiesel made from raw oil with 0.05 wt. % water content added was observed to bear the lowest water content, acid value, and cold filter plugging point (CFPP) and, therefore, superior fluidity at low temperatures. The lower CFPP of biodiesel is attributed to its more unsaturated fatty acids and lower iodine value. In addition, the biodiesel produced from feedstock oil with 0.02 wt. % water added was observed to have the lowest iodine value but the highest kinematic viscosity. The optimum content of initial water added to palm oil for superior fluid characteristics of the biodiesel product is thus suggested to be in the range between 0.02 wt. % and 0.05 wt. %.