Cellulose fiber insulation (CFI) can be installed as a loose-blown or spray-applied product. Spray-applied CFI is installed in a wet or damp form with water and sometimes adhesives used as bonding agents. The spray application leads to a more uniform and homogenous product with lower density in comparison to loose-blown insulation. It is self-supporting and does not need permanent retainers and can lead to cost savings for the installers. In new construction, spray-applied CFI is gaining acceptance and popularity in northern regions of the United States. Installations are performed year round even in cold regions of the country. Walls are often enclosed with interior finishes shortly following the installation of spray-applied CFI. It is commonly assumed that moisture contained in the CFI will dry out within a short period of time. Limited information exists in the public domain regarding the drying characteristics of walls with spray-applied CFI insulation and how proper drying rates can be achieved. The hygrothermal response of a typical residential wood-framed wall was investigated using combined numerical and empirical approaches. Hygrothermal computer model was employed to examine drying rates and residual moisture contents in the CFI and exterior sheathing. Laboratory tests were conducted to quantify and validate hygrothermal storage and transport properties of CFI. The results show slow drying rates for spray-applied CFI installed in cold weather. The drying period for CFI to reach moisture content levels safe for the installation of interior finishes can exceed the recommended 24–48 hr. In fact, the walls will not fully dry unless the relative humidity of the interior air is maintained below the critical limit, which is dependent on the outdoor temperature. The current practice of measuring the moisture content at the surface or at the center depth of the cavity is not representative of moisture contents at other locations and is a misleading indicator whether the insulation in its full depth is sufficiently dry for the installation of gypsum wallboard.