Many women in low-income countries carry heavy loads of drinking water for their families in difficult terrain. This can adversely affect their health and well-being. The present study is the first to investigate the physical burden of water carrying and women’s psychosocial well-being, and how this relationship is moderated by environmental and health conditions. Trained local interviewers conducted interviews with 1001 women across five rural communities in Nepal. In addition, objective measurement was used to assess the weight carried and distance from the water source. The physical burden of water carrying was calculated from weight, distance, and frequency of trips. Its association with psychosocial well-being was modeled using generalized estimating equations. Two additional models included the terrain and uterine prolapse as moderators. The physical burden of water carrying is directly related to higher emotional distress and reduced daily functioning. This correlation was exacerbated for women carrying in hilly versus flat terrain, and for those who had uterine prolapse. Our results underline the importance of adequate water access for women’s psychosocial well-being, especially for vulnerable populations such as women with impaired health (e.g., uterine prolapse) or those living in hilly terrain. The results further highlight the interconnectedness of the Sustainable Development Goal (SDG) 6: water access, SDG 3: health and well-being, and SDG 5: gender equality.