The role of water on the sub-surface degradation of unidirectional carbon fiber reinforced epoxy composite is examined. The correlation between the debonding of carbon fibers at the fiber–epoxy interface, and the wear behavior of the carbon fiber composite are discussed based on an in-depth analysis of the worn surfaces. We demonstrate that a reciprocating sliding performed along an anti-parallel direction to the fiber orientation under dry conditions results in a large degradation by debonding and breaking of the carbon fibers compared to sliding in parallel and perpendicular directions. Immersion in water has a harmful effect on the wear resistance of the carbon fiber composite. The competition between crack growth and the wear rate of epoxy matrix and/or carbon fibers in the sliding track determines the level of material loss of the composite in both test environments.