Building construction requires important amounts of freshwater, thus depleting the already stressed natural water resources. This issue could be addressed by using recycled water in construction and in building systems. However, integrating greywater recycling systems is limited by complexity, costs, vulnerability to environmental fluctuations, and coordination of policymakers, developers, and construction practitioners. Here, we review recycled water systems in buildings with focus on case studies of successful implementations, policies, recycled water treatment in buildings, and health aspects. Compared to conventional tap water, the incorporation of recycled water enhances the consistency and workability of reclaimed water concrete by 12–14%, and it increases concrete viscosity by 11% and yield stress by 25%. We discuss the intricacies of building water recycling systems, with emphasizing on conserving water, mitigating environmental impact, and enhancing economic efficiency. Challenges include water quality assurance, dual piping infrastructure, and regulatory compliance. Government interventions, including incentives, mandates, and subsidy policies, emerge as drivers for widespread adoption. Technological advancements, such as membrane filtration and advanced oxidation processes, are examined for strengths and limitations.