BACKGROUND: The progression of FLAIR white matter hyperintensities (WMHs) on MRI heralds vascular-mediated cognitive decline. Even before FLAIR WMH progression, adjacent normal appearing white matter (NAWM) already demonstrates microstructural deterioration on diffusion tensor imaging (DTI). We hypothesized that elevated DTI free water (FW) would precede FLAIR WMH progression, implicating interstitial fluid accumulation as a key pathological step in the progression of cerebral small vessel disease. METHODS: Participants at least 3 months after an ischemic stroke or TIA with WMH on MRI underwent serial brain MRIs every 3 months over the subsequent year. For each participant, the WMHs were automatically segmented, serial MRIs were aligned, and a region of WMH penumbra tissue at risk was defined by dilating lesions at any time point and subtracting baseline lesions. Penumbra voxels were classified as either stable or progressing to WMH if they were segmented as new lesions and demonstrated increasing FLAIR intensity over time. Aligned DTI images included FW and FW-corrected fractional anisotropy (FATissue) and mean diffusivity (MDTissue). Logistic regression and area under the receiver-operator characteristic curve (AUC) were used to test whether baseline DTI predicted voxel-wise classification of stable penumbra or progression to WMH while covarying for clinical risk factors. RESULTS: In the included participants (n = 26, mean age 71 ± 9 years, 31% female), we detected a median annual voxel-wise WMH growth of 2.9 ± 2.6 ml. Each baseline DTI metric was associated with lesion progression in the penumbra, but FW had the greatest AUC of 0.732 (0.730 - 0.733) for predicting voxel-wise WMH progression pooled across participants. DISCUSSION: Baseline increased interstitial fluid, estimated as FW on DTI, predicted the progression of NAWM to WMH over the following year. These results implicate the presence of FW in the pathogenesis of cerebral small vessel disease progression.