The development of wood-based thermoplastic polymers that can replace synthetic plastics is of high environmental importance, and previous studies have indicated that cellulose-rich fiber containing dialcohol cellulose (ring-opened cellulose) is a very promising candidate material. In this study, molecular dynamics simulations, complemented with experiments, were used to investigate how and why the degree of ring opening influences the properties of dialcohol cellulose, and how temperature and presence of water affect the material properties. Mechanical tensile properties, diffusion/mobility-related properties, densities, glass-transition temperatures, potential energies, hydrogen bonds, and free volumes were simulated for amorphous cellulosic materials with 0-100% ring opening, at ambient and high (150 °C) temperatures, with and without water. The simulations showed that the impact of ring openings, with respect to providing molecular mobility, was higher at high temperatures. This was also observed experimentally. Hence, the ring opening had the strongest beneficial effect on “processability” (reduced stiffness and strength) above the glass-transition temperature and in wet conditions. It also had the effect of lowering the glass-transition temperature. The results here showed that molecular dynamics is a valuable tool in the development of wood-based materials with optimal thermoplastic properties.