A kinetic model for the transesterification of a cotton seed oil with ethanol in the presence of water is proposed. The effect of water content in the reacting mixture on the transesterification reaction is studied. The dependence of the equilibrium constants and reaction rate constants on the water content is presented. Equilibrium was reached within less than 30 min reaction time in all cases. The increase of the water content results in decrease of the conversion level of the oil. By increasing the ethanol/oil ratio the conversion of triglyceride increases and the concentration of mono- and diglyceride in the product mixtures are reduced.