This study was conducted to assess the effect of the pulping by‐products crude tall oil (CTO), distilled tall oil (DTO), and tall oil fatty acid (TOFA) on dynamic water vapor sorption behavior, interfiber strength, and thermal stability of cellulosic paper‐sheets. The results were compared against those obtained in cellulose papers treated with the conventional petroleum‐derived hydrophobic agent hydrowax and in untreated ones. The tall oil treatments caused strong reduction in equilibrium moisture content of the paper‐sheets during adsorption and desorption runs. The same trend was noticed for the hydrowax‐treated papers, however, it was less pronounced than the CTO‐treated and DTO‐treated samples in the relative humidity range of 75–95%. The sorption hysteresis was considerably decreased after the treatments. The ultimate dry‐tensile strengths of the paper‐sheets were significantly reduced by TOFA and hydrowax treatments, while CTO and DTO showed comparable strength as that of untreated control. The ultimate wet‐strengths of the paper‐sheets were improved after the treatments. The thermal stability of the specimens was improved by the tall oil treatments, and the hydrowax‐treated samples illustrated lower degradation temperature than the untreated control. The results are promising for the use of tall oils as alternative hydrophobic agents of cellulosic fiber‐based products, such as wood panels and paper packaging. © 2018 Wiley Periodicals, Inc. J. Appl. Polym. Sci. 2019, 136, 47303.