Water stress (drought and waterlogging) is severe abiotic stress to plant growth and development. Melatonin, a bioactive plant hormone, has been widely tested in drought situations in diverse plant species, while few studies on the role of melatonin in waterlogging stress conditions have been published. In the current review, we analyze the biostimulatory functions of melatonin on plants under both drought and waterlogging stresses. Melatonin controls the levels of reactive oxygen and nitrogen species and positively changes the molecular defense to improve plant tolerance against water stress. Moreover, the crosstalk of melatonin and other phytohormones is a key element of plant survival under drought stress, while this relationship needs further investigation under waterlogging stress. In this review, we draw the complete story of water stress on both sides—drought and waterlogging—through discussing the previous critical studies under both conditions. Moreover, we suggest several research directions, especially for waterlogging, which remains a big and vague piece of the melatonin and water stress puzzle.