The technique of preparing starch-based foam by steam has been widely used in the food and packaging industries, but many aspects of the process are far from being fully understood, in particular the multi-functions of water. In this work, the relationship between phase transition and foaming behavior of starch-based material was established by investigating the effects of water content on melting temperature (Tm), crystallinity, foaming process, cell structure as well as mechanical properties. It was found that there was a critical point of water content (between 16–18%) at which the expending ratio changed significantly since the cell structure changed from open to closed. The lower the water content, the higher the Tm of starch-based materials, which resulted in lower melting strength and open cell structure. Conversely, higher water content and lower Tm resulted in higher melting strength and closed cell structure. The closed cell structure prevented moisture evaporation during foaming and kept the lower Tm, which resulted in foam shrinking when the material was cooled down due to negative pressure in the cell. The water contained in the open cell was evaporated mostly during the foaming process, which resulted in higher Tm and stable rigid foam structure, with unit density of about 26kg/cm3. Water forms hydrogen bonds with hydroxyl chain in starch, and the bonded water is more stable under high temperature. Therefore, the bonded water is a good plasticizer but an inefficient blowing agent for preparing starch-based foam. The compressive strength of the starch-based foams increased from about 42 to 67Kpa with decreasing water content from about 15 to 10%, which could be explained by their thermal properties and cell structures.