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Gas atomized powder is commonly used for Laser powder bed fusion (L-PBF) additive manufacturing because of its good flowability. On the other hand, water atomized powder is inexpensive and has a great potential for application to middle range manufactured products. In this study, SUS316L water atomized powder was applied to L-PBF additive manufacturing. To solve its poor flowability and excessive spatter, we investigated these problems and modified the additive manufacturing machine. Our test results revealed that a laser energy density of 57.8 J/mm3 is one of the best laser conditions for water atomized powder additive manufacturing. To apply the design for additive manufacturing (DfAM), the mechanical properties and overhang process window were revised. Finally, an extruder die plate with better pellet productivity was designed and produced by using SUS316L water atomized powder. The results showed that, it produced better quality pellets than the original one. From this research, we found that water atomized powder is useful for L-PBF additive manufactured products.