The effect of water on higher alcohol and noncondensable gas formation in condensed-phase ethanol Guerbet chemistry over Ni/La2O3/gamma-Al2O3 catalysts is investigated. Addition of 10 wt % water to anhydrous ethanol has a modest effect on conversion rate but significantly reduces both n-butanol and C6+ alcohol-yields and increases noncondensable gas yields. Removal of water formed during Guerbet condensation reactions was accomplished by installing a recirculating loop that passed the reacting solution through a bed of 3 A molecular sieves at low temperature. Removal of reaction water further reduces gas selectivity to less than 10% and increases alcohol selectivity to greater than 75% at 50% ethanol conversion. Water present in reaction is postulated to adsorb on the nickel surface as OH, increasing C-C bond breakage of the adsorbed acetaldehyde intermediate, and also interact with basic sites responsible for the condensation reaction, weakening their activity.