Plasticizers turn brittle bio-based and biodegradable highly hydrophilic polymers into tough materials. Unfortunately, it also means that the material becomes softer and weaker. The concept of combining a plasticizer and reinforcing fibers was investigated here on a protein material (wheat gluten) plasticized with glycerol and reinforced with chopped carbon fibers. The carbon fibers showed good interfacial bonding with the gluten matrix and improved both tensile strength and Young's modulus of the material. The resulting composites also showed reduced elongation at break but still underwent ductile fracture under tension. Water-assisted extrusion, where water was used as a processing aid, was used to manufacture the composites and boost the reinforcement. Water addition significantly reduced the viscosity of the gluten dough and thus decreased fiber breakage during extrusion/compounding. The composites prepared with water-assisted extrusion had much longer fibers and consequently higher stiffness than those prepared without water. Apart from the balanced mechanical properties, the resulting composites showed reduced uptake of moisture (reduced moisture sensitivity) due to the waterimpermeable carbon fibers. Hence, a new extrusion method was presented for fiber-reinforced inherently viscous plant-based polymer composites, which enabled good mixing without critical fiber damage and thus improved fiber reinforcement.