Greenhouse gas emissions are one of the critical factors that affect climate change, increasing flooding risk and threatening human life. The use of traditional construction materials is responsible for a higher percentage of global greenhouse gas emissions when compared to the use of sustainable materials in the construction industry. The substitution of current building materials with sustainable materials is essential to reduce greenhouse gas emissions and positively influence climate change when the current construction demand in the world is considered. Wood is one of the primary environmentally friendly construction materials in regard to high carbon storage and low carbon emissions. Cross-laminated timber (CLT) is prefabricated and this type of composite wood material is convenient for constructing middle to high rise buildings because materials are able to be cut to specific specifications which lowers onsite labor time. This research observed the hygrothermal behavior of partially submerged CLT wall panels during the wetting and drying period and simulated the flooding of the panels with a software tool, Wärme Und Feuchte Instationär (WUFI). The higher number of CLT layers caused a slower water penetration rate throughout the layers with a lower water absorption rate corresponding to the first layer than the other layers, so the water was primarily retained in the first layer. Also, water penetration through axial direction significantly decreased due to gravity impact when the height of CLT panels was increased. The visual assessment showed that the 3-day-wetted CLT panel configurations did not show any type of fungi growth through the wetting and drying period. However, both untreated and treated CLT panels with the envelope system did have fungi growth on the drywall after a 20-day-wetting period.