The current amount of data coming from all kinds of devices together with the incessant increase in computing capacity is revolutionizing almost all existing sectors, and the water sector is no exception. The monitoring of urban water cycle infrastructures makes it possible to generate a large amount of data, this information, previously processed, helps to increase the efficiency of the processes carried out in these infrastructures, from catchment to purification and subsequent discharge. This information, in addition to improving internal aspects such as the operation and maintenance of the infrastructures, allows them to be linked to multiple other variables in other sectors, making new technological approaches and more effective management strategies possible. A practical example is wastewater treatment plants. From the perspective of the circular economy, these infrastructures are capable of producing a large amount of resources, which, if properly managed, can reduce the pressure on conventional resources. In this sense, digitization allows the integration of the different market players, thus optimizing the supply and demand of these resources and ultimately advancing the practical application of the circular economy. This paper reviews the potential of digitalization in the urban water sector and proposes numerous practical examples to accelerate the transition towards economic, social, and environmental sustainability.