In this study, water was used as a coblowing agent in the carbon dioxide (CO2) extrusion foaming process in a twin screw extruder. It enlarged cell size and thus lowered foam density for better thermal insulation. Different strategies have been studied including direct injection of water into the extruder with surfactants, extrusion foaming of water expandable polystyrene (WEPS) beads, and feeding water containing activated carbon (WCAC)/polystyrene (PS) pellets. It was found that WCAC/PS pellets provided the most stable and clean extrusion process, more uniform cell morphology, and better thermal insulation than other methods. POLYM. ENG. SCI., 50:1577-1584,2010. (C) 2010 Society of Plastics Engineers