A more sustainable water management on dairy farms is necessary because of rising tap water production costs and exhaustion of groundwater resources in an increasing number of areas. Alternative water sources like rain water collected from roofs and yards and effluents from on-site wastewater treatment should be considered. The objective of this paper is to discuss options for closed water systems on dairy farms. Animal drinking and cleaning of milking equipment are major water demands on dairy farms. In some regions large volumes are needed for grassland irrigation or manure flushing. Treatment of dairy farm wastewater in constructed wetland systems seems to produce good quality effluents. The most plausible options for closed water systems on dairy farms are the collection and use of rain water and treatment and reuse of wastewater for irrigation, manure flushing and animal drinking water. Whether effluents are safe to be used as animal drinking water should be subject to further research.