The circular economy has attracted considerable attention also in relation to water, an indispensable element to the sustainment of life and a critical input resource for the world economy. Despite a growing body of research on the circular economy of water (CEW), a consistent terminology and a clear conceptualisation of CEW strategies are lacking. Without such aspects, decision-makers, scientists and professionals may be hindered in developing a shared understanding of problems and solutions and exploiting new opportunities in the domain of the CEW. Furthermore, we argue that water is a unique element in the circular economy because it is a resource, a product and a service with no equivalent in the economic system and should be considered and valued as such in the CEW. Accordingly, we provide the definition of the CEW as an economic framework for reducing, preserving and optimising the use of water through waste avoidance, efficient utilisation and quality retention while ensuring environmental protection and conservation. Building on an analysis of academic literature and cases studies, we outline and illustrate a set of nine CEW strategies, including Rethink, Avoid, Reduce, Replace, Reuse, Recycle, Cascade, Store and Recover. Finally, we identify normative (legislation), governance (roles and responsibilities) and implementation (barriers and opportunities for application) challenges that need to be addressed to facilitate the transition to a comprehensive CEW.