Auto Talk 101: Potential Reasons for Liquid Coming Out of Muffler - as part of the expert series by GeoBeats. Auto Talk 101 - Potential Reasons for Liquid Coming Out of Muffler If you see liquid dripping out of your muffler or your tailpipe, your exhaust system, generally that's condensation. Because exhaust systems get quite hot, they will, when they are cooling down cause some moisture to collect in your muffler and your pipes and then it will drip out. It's harmless. It's normal. Don't need to worry about it. What it does do is contribute to the rusting out of your exhaust system. And usually we see that on cars that get driven on a lot of short trips. Where the exhaust doesn't really get up to operating temperature to evaporate that moisture out of there. And so, the moisture lays in the bottom of the pipes, causes them to rust out pretty much early.