Wood materials are being reinvented to carry superior properties for a variety of new applications. Cutting‐edge nanomanufacturing transforms traditional bulky and low‐value woods into advanced materials that have desired structures, durability, and functions to replace nonrenewable plastics, polymers, and metals. Here, a first prospect report on how novel nanowood materials have been developed and applied in water and associated industries is provided, wherein their unique features and promises are discussed. First, the unique hierarchical structure and associated properties of the material are introduced, and then how such features can be harnessed and modified by either bottom‐up or top‐down manufacturing to enable different functions for water filtration, chemical adsorption and catalysis, energy and resource recovery, as well as energy‐efficient desalination and environmental cleanup are discussed. The study recognizes that this is a nascent but very promising field; therefore, insights are offered to encourage more research and development. Trees harness solar energy and CO2 and provide abundant carbon‐negative materials. Once harvested and utilized, it is believed that advanced wood materials will play a vital role in enabling a circular water economy.