The aim of this research was to investigate the effect of water-soluble protein (WSP) as a plasticizer in the fish feed extrusion process and the impact on physical pellet quality. A three-factor central composite design was used to study the influence of the variables WSP in the feed mix, and steam and water addition in the extruder. Regression models with r2 in the range of 0.862–0.976 (P < 0.001) were established for specific mechanical energy (SME), pellet hardness, cutting strength, sectional expansion index, length, bulk density, oil adsorption capacity and extrudate flow-starting temperature (Tf). Addition of WSP had a positive effect on SME and improved the physical pellet quality, while moisture had the opposite effect. Expansion parameters showed a complex relationship and were influenced by all the studied process variables. Increase in WSP and moisture content had a comparable effect on Tf reduction. This opens up the possibility to obtain a satisfactory ‘cook’ at reduced moisture level with a potential for significant reduction of the energy consumption during drying of the extrudate. Overall conclusion from the experiment is that WSP can be used as a processing aid for the fish feed industry, serving multiple purposes as nutrient, plasticizer and binder in extruded fish feed.