Residual moisture (0–10 wt%) in the pyrolyzed fuel has a significant effect on the distribution and properties of pyrolysis products. It is due to the concentration of steam in the primary pyrolysis gas which is estimated to as much as 80 vol%. This is normally not taken into account in case of fixed-bed reactor studies at laboratory scale, where inert carrier gas is used to secure the absence of oxidizing agent, because the moisture is released within the beginning of heating and carried over from the hot zone before the pyrolysis starts. Consequently, the application of the results to large-scale technologies (working in the continuous sludge feeding regime) is not entirely valid because in industrial large-scale systems the steam passes through the hot pyrolysis zone and takes part in high-temperature reactions. In the experiments presented within this manuscript, we allowed the residual moisture typical for industrially dried sludge (10 wt%) to react within the pyrolysis process by incorporating it into the carrier gas (consisting finally of 70 vol% steam and 30 vol% He). This steam reacted within the pyrolysis process at temperatures 400–800 °C in a fixed-bed reactor. The results were thoroughly compared with the results of a previous study with pure helium atmosphere, within the same experimental setup. When comparing the experiments with and without steam in the carrier gas, a significant difference in the distribution and properties of the products was observed especially at temperatures above 600 °C. The use of steam as a carrier gas (instead of inert gas) resulted in a remarkably higher pyrolysis gas yield. The pyrolysis gas constituted of almost double the content of hydrogen with a decrease in the yield of the sludge-char. Moreover, particular changes in sludge-char properties were observed. Not only the steam enhanced textural properties of the sludge-chars, especially the specific surface area and the total specific pore volume, but it also resulted in a significantly lower content of C, H, N and S and lower heating value of the sludge-char. These parameters can be decisive in case of sludge-char utilization ranging from agronomic through adsorbents to fuel use. Our approach provides a simplified way to better predict the distribution and properties of pyrolysis products in large-scale units. This can be time and money saving and is crucial to make decisions about the applicability of pyrolysis technology to specific sewage sludge products.