There are several factors that cause water to get into the engine oil, including leaking intake manifold gaskets, cracked engine castings and a blown head gasket. One common cause, the formation of water as a gasoline byproduct, is part of normal engine operation.
Even in perfectly sealed engines, water intrudes and forms condensation within the engine. For every gallon of gasoline burned, a little more than a gallon of water vapor forms as a byproduct. During the course of longer trips, the engine reaches its ideal operating temperature, and the heat causes any condensed water to evaporate. If the car travels only short trips, abnormal water accumulation can result because the engine does not reach a temperature that is sufficient to burn off the excess water.
If water is mixing with the oil in a V-style engine that has intake manifolds sealed to the block, then the intake manifold water jacket gasket might be leaking into the inside of the engine. Such leaks occur when bacteria builds up in the antifreeze or coolant solution. This bacteria eventually eats through engine parts.
A blown head gasket also could cause water to mix into engine oil. If this is the case, then the vehicle requires immediate attention and service, since blown head gaskets lead to engine malfunction.