Medical water therapy (also called medical hydrology) is practiced worldwide both for relaxation and treatment of diseases. While this practice is still thriving in Bhutan, there is a lack of proper documentation and critical study. Therefore, the current study reports on the water therapies practiced in Bhutan and their health benefits. We used four-stage process: (1) a review of literature on balneotherapy (both traditional textbooks and scientific papers); (2) listing and surveying the hot springs, mineral, and holy spring waters; (3) reviewing the health records of the patients maintained at the traditional hospitals and interviewing traditional physicians and patients about health benefits; and (4) reviewing available literature to identify existing clinical trials data to provide evidence for hydrotherapies. We found three main forms of hydrotherapies are practiced in Bhutan, which comprises herbal bath therapy, balneotherapy, and spiritually empowered waters. The most popular hydrotherapies are herbal bath and hot spring therapies. Herbal bath therapy needs traditional physicians’ prescriptions, while hot springs do not require it. Through field surveys, ten different hot springs (tsha-chu) and 17 medicinal water or mineral springs (sman-chu), and 17 holy spring-waters (sgrub-chu) were identified. In general, medical water therapies are used by the Bhutanese people to treat various ailments, including gastritis, neurological disorders, arthritis, dermatological diseases, and rheumatological and musculoskeletal disorders. Even though a lack of scientific evidence makes it difficult to draw concrete conclusions on their traditionally claimed efficacy and safety, there are clinical evidences documented from other countries.