Urban and regional demand for freshwater in National Capital Territory of Delhi has grown significantly over the last few decades. The National Capital Territory, Delhi is one of the most rapidly growing urban centers of the world, with a population of about 15 million people, a high rate of immigration and numerous illegal settlements. In order to meet the increasing water demand, the government is focused almost exclusively on supply management and engineering solutions, which have resulted in investments of hundreds of millions of Rupees. Environmental, economic and social policies associated with water management are largely inadequate and insufficient, which is resulting in increasing deterioration in the environment, health and socio-economic conditions of a population living in one of the largest urban agglomerations of the world. Surprisingly, however, no long-term strategies on demand-management, reuse, conservation, and improved water-management practices have been developed so far. The aim of this paper is to provide an overview of the urban water use with a view to enhance the understanding of the factors influencing urban water demand for residential, commercial and industrial sectors in National Capital Territory of Delhi. The analysis indicates an urgent need to radically improve the current water supply and wastewater management practices to become sustainable. Other measures such as public education and information/awareness will be necessary to achieve desired rationalization in water consumption, especially in the residential and commercial sectors.