Biomass comprises a certain amount of water, which affects the reactions in organic solutions. Generally, water facilitates the hydrolysis of methyl lactate resulting in a decrease of the yield. However, we observed that a certain water content is beneficial for the production of methyl lactate on the conversion of sugars with NiO as a catalyst in near-critical methanol solutions. With water, glycolaldehyde dimethyl acetal, the main side product, was hydrolyzed to glycolaldehye. Glycolaldehye could be transformed to sugars via the aldol condensation at relative higher temperatures, and the sugars were subsequently converted to methyl lactate. NiO could be regenerated by calcination, and water showed almost no adverse effect on the activity of NiO catalyst. The beneficial effect of a certain water content showed a great potential for the direct production of methyl lactate from raw biomass materials without drying.