Water-reactive polyurethane (PU) grout is widely used for water sealing, yet its gel-forming capacity and property evolution under uncontrolled water addition remain insufficiently understood. In this study, PU:water volume ratios from 1:1 to 1:20 were investigated using gelation tests, Shore OO hardness and uniaxial compression tests, SEM, ATR-FTIR, and non-reactive all-atom molecular dynamics simulations. Increasing water addition prolonged the gelation time from approximately 15 s at PU:water = 1:1 to 22 s at 1:15. Stable gel formation was maintained up to a water-addition multiple of 18× (PU:water = 1:18, v/v), whereas stable gel formation failed at multiples of 19× and 20×. Meanwhile, the Shore OO hardness decreased from approximately 63 to 2, and the compressive stress at 50% strain decreased from 208 to 8 kPa between PU:water = 1:1 and 1:15. SEM revealed increasingly heterogeneous and locally loose pore structures at high water contents. ATR-FTIR confirmed substantial consumption of free –NCO groups and changes in the carbonyl/amide region after curing. MD simulations further showed composition-dependent changes in local water distribution and hydrogen-bond participation before reaction. These results establish the water-tolerance boundary and multiscale property evolution of water-reactive PU, providing a basis for controlling PU–water proportions in water-rich grouting applications.