Background: Increasing pressure on global water resources due to pollution, climate change and population growth necessitates innovative and sustainable solutions. Biotechnology has emerged as a promising approach for addressing water contamination and improving water use efficiency. Objective: This review explores the role of biotechnology in mitigating water pollution, enhancing water conservation and supporting sustainable agricultural practices under conditions of water scarcity. Discussion: Biotechnological applications, including the use of microorganisms, bioengineered systems and plant-based innovations, play a crucial role in water purification and reuse. Microbial processes contribute to the degradation of pollutants and facilitate wastewater treatment, enabling safe recycling of water resources. In agriculture, biotechnology enhances crop tolerance to abiotic stresses such as drought, salinity, extreme temperatures and frost, thereby reducing water demand. Additionally, plant–microbe interactions improve water uptake efficiency and support cultivation in arid and semi-arid regions. These strategies collectively contribute to optimizing water utilization and maintaining environmental balance. Conclusion: Biotechnology provides effective and sustainable tools for controlling water pollution and improving water resource management. Its integration into environmental and agricultural systems offers significant potential for addressing global water scarcity and ensuring long-term ecological sustainability.