Replacement of the toxic solvent used during manufacturing of cathode electrodes for Li-ion batteries with water is an essential step on the road towards eco-friendly battery production. This study aims to improve the performance of pilot-scale water-based LiNi0.83Co0.12Mn0.05O2 cathodes. The importance of proper electrode treatment before cell assembly to achieve maximum cell performance is demonstrated. Temperatures ranging from room temperature to 170 °C were applied to the electrodes to investigate the impact of residual moisture in pouch cells. Electrochemical cycling showed that despite a much higher amount of residual moisture a low drying temperature was beneficial. X-ray photoelectron spectroscopy indicated that with increasing temperature a phase reconstruction in the near-surface region of the cathode material particles is the cause for the difference in performance. This was further supported by impedance spectroscopy showing growing charge-transfer resistance arcs with higher temperature, which split into two contributions with ongoing cycling. Already temperatures above 100 °C resulted in more pronounced surface reconstruction and stronger impedance increase lowering the long-term cycling stability, while the residual moisture seemed to have only a minor impact. By optimizing the drying temperature, the long-term cycling stability could be improved from 1000 to 1700 cycles before reaching 80% capacity retention.