Flow-cell architectures have emerged as a powerful platform for continuous and stable lithium-mediated nitrogen reduction (Li-NRR), enabling ambient-condition electrochemical ammonia synthesis and offering a promising alternative to Haber-Bosch processes. However, Li-NRR is exceptionally sensitive to trace water, and even minor variations in water content can profoundly alter interfacial chemistry. Here, we systematically investigate how initial water concentration affects Li-NRR performance in a continuous-flow cell. Excess water drives the formation of a thick solid electrolyte interphase (SEI) layer, which may impede nitrogen access to metallic lithium and hinder lithium-ion transport. As a result, the ammonia Faradaic efficiency collapses from ~61% to ~3%. These findings reveal the decisive, previously underappreciated role of water in governing SEI evolution and highlight the necessity of precise water control for achieving stable, high-efficiency continuous-flow Li-NRR.