INTRODUCTION: Most individuals with isolated rapid eye movement sleep behavior disorder (iRBD) develop dementia with Lewy bodies (DLB) or Parkinson's disease (PD). Brain biomarkers predicting specific phenoconversion trajectories are lacking. METHODS: In this multicenter diffusion magnetic resonance imaging study (261 iRBD, 177 controls), free water (FW) was measured in the nucleus basalis of Meynert (NBM) and posterior substantia nigra (SN). Among 230 iRBD patients with follow-up, 64 converted (16 DLB, 38 PD). Time-to-event analyses were performed to assess differential phenoconversion. RESULTS: Phenoconverters had higher FW in the NBM and posterior SN. Only FW in the NBM predicted conversion to DLB over PD. NBM volume predicted DLB conversion, but only FW remained significant when both were modeled. FW in the NBM correlated with lower MoCA scores in iRBD. DISCUSSION: FW in the NBM is a sensitive biomarker of cognitive decline and DLB progression in iRBD, outperforming volume and supporting its use in early stratification. HIGHLIGHTS: FW in the NBM specifically identifies conversion to DLB. Increased FW in the NBM is associated with lower global cognition in iRBD. FW in the SN in iRBD does not relate more to DLB than PD. FW in the NBM is a biomarker of differential phenoconversion in iRBD.