Cities are hotspots of commodity consumption, with implications for both local and systemic water resources. Water flows “virtually” into and out of cities through the extensive cross-boundary exchange of goods and services. Both virtual and real water flows are affected by water supply investments and urban planning decisions, which influence residential, commercial, and industrial development. This form of water “teleconnection” is being increasingly recognized as an important aspect of water decision-making. The role of trade and virtual water flows as an alternative to expanding a city’s “real” water supply is rarely acknowledged, with an emphasis placed instead on monotonic expansion of engineering potable water supplies. We perform a literature review of water footprint studies to evaluate the potential and importance of taking virtual flows into account in urban planning and policy. We compare and contrast current methods to assess virtual water flows. We also identify and discuss priorities for future research in urban water footprint analysis.