The effect of moisture on the dielectric properties of porous aluminum oxide thin films is studied. It is observed that the capacitance of Au-porous Al2O3-Al structure gradually changes with time particularly when exposed at higher moisture content. This instability and degradation in the properties of nanoporous aluminum oxide thin films is explained by incorporating the effect of lateral moisture diffusion in the pore wall. The seepage of moisture results in a virtual pore widening. The mechanism is illustrated. A model is proposed to explain the effect of moisture on dielectric degradation and on the capacitance characteristics.