Sustainable urban water management is essential to handle water scarcity, leakage, and inefficient distribution. This paper covers water management in urban areas, including an introduction, an overview of water management practices, the characteristics and functioning of water distribution systems, monitoring and control systems for efficient distribution, smart systems for optimization, strategies for water conservation and waste management, per capita water demand analysis, and desalination plant overviews. The article proposes a blockchain-based water management architecture with IoT sensors for accurate reporting. The framework uses blockchain technology to authenticate and share real-time data between sensors and the water distribution dashboard. It also has a modular API for water leakage detection and flow control to decrease water waste and enhance distribution. The suggested approach might enhance water management; however, its execution is complex. Maintaining the framework’s efficacy is advised. The research provides insights into water management and proposes a technology solution employing blockchain and IoT sensors for trustworthy data reporting and effective water distribution to promote sustainable urban water management.