Exoplanets—planets orbiting around stars other than our own Sun—appear to be common. Significant research effort is now focused on the observation and characterization of exoplanet atmospheres. Species such as water vapour, methane, carbon monoxide and carbon dioxide have been observed in a handful of hot, giant, gaseous planets, but cooler, smaller planets such as Gliese 1214b are now analysable with current telescopes. Water is the key chemical dictating habitability. The current observations of water in exoplanets from both space and the ground are reviewed. Controversies surrounding the interpretation of these observations are discussed. Detailed consideration of available radiative transfer models and linelists are used to analyse these differences in interpretation. Models suggest that there is a clear need for data on the pressure broadening of water transitions by H 2 at high temperatures. The reported detections of water appear to be robust, although final confirmation will have to await the better quality observational data provided by currently planned dedicated space missions.