Polymer composite materials are widely used in marine applications where an understanding of the long-term performance is essential for economic, safety and durability requirements. Although moisture absorption in composites has been studied for many years, the relationship between the mechanisms of moisture absorption and consequent changes in material behaviour has received much less attention. Understanding degradation is necessary for developing lifetime assessments. In this work, long-term exposure of a unidirectional carbon fibre epoxy composite material in water has been investigated in relation to mechanical property changes and moisture uptake. Using diffusion modelling and microscopy of the fracture surfaces, it is possible to correlate water absorption to experimental data showing how the position of water in the material causes changes to flexural properties (modulus decreased by 14% and strength by 20%) and in the glass transition temperature, Tg reduced by 18%. Flexural modulus has been shown to be most affected by water interaction with the fibre interface; Tg by water interaction within the resin; and flexural strength equally by water interaction with both fibre interface and resin.