In our previous paper [Watano S. et al., J. Powder Technology Japan, 37, 362-370 (2000)], a novel compaction tester was developed to quantitatively evaluate the water dispersion condition of a wet kneaded mass prepared by a paddle type kneader. It has been demonstrated that the physical properties of pellets prepared by extrusion granulation after the kneading can be well predicted by the pressure transmission obtained through the compaction tester. This paper describes a more detailed investigation of the water dispersion, its mechanism and pressure transmission characteristics of wet kneaded masses prepared under various operating conditions. First, kneading by a paddle type kneader was conducted to prepare wet masses under various binder contents using different additional methods and different starting materials. Secondly, water dispersion and pressure transmission characteristics of wet masses were investigated. After the wet kneading, the wet kneaded masses were extruded through a dome type extruder and were dried by a fluidized bed to prepare dry pellets. The relationship between water dispersion and pressure transmission can be expressed by a single line, regardless of binder content or methods of addition. This implies that these parameters have no effect on the water dispersion condition of the wet kneaded mass prepared by a high shear paddle type kneader. Different water dispersion characteristics and the mechanism obtained by different starting materials can also be evaluated by the pressure transmission data. Properties of dry pellets can also be predicted by the pressure transmission. It can be concluded that the developed compaction tester can quantitatively evaluate the water dispersion condition of a wet kneaded mass and also predict properties of the final extruded products.