Pyrolysis oil (PO) derived from biomass has the potential to serve as a renewable feedstock for future carbon black (CB) production. However, its composition is significantly different from the fossil feedstocks currently used for CB manufacturing, as it contains higher concentrations of oxygen and water that might influence the yield and nanostructure of CB. In this article, we examine how the water content in PO affects the production of CB at high-temperature pyrolysis (1400–1600 °C) in an electrically heated entrained flow reactor. The main objective was to investigate the influence of water content on the yield and quality of the CB produced from upgraded PO with varying inherent water contents (0–20 wt %). The experiments in this work were performed with model compounds to simulate an upgraded PO. The produced CB was characterized by using several analytical techniques, including elemental composition, powder X-ray diffraction, transmission electron microscopy, and nitrogen physisorption. The results show a clear correlation between the water content in the PO feedstock and the output of CB, showing a reduced yield of CB as the water content increases. These results highlight the crucial role of feedstock composition in making PO a viable renewable feedstock for CB production.