People around the world have shaped societies and urban spaces around water for millennia. They have transformed natural water structures and patterns to serve their diverse needs. The ways in which historical decisions affect contemporary water systems and influence future planning of urban systems still need to be fully recognized. This paper explores the multiple roles of water systems in Chang'an during the Western Han Dynasty. Chang'an, one of the ancient names for the city of Xi'an, was a typical capital city of China and East Asia in early ancient times. This study explores everyday practices pertaining to water as well as its role in defense, gardening, politics and culture. Drawing upon three historical theories, this study presents findings that water was embedded in the design of traditional Chinese capitals. The siting and construction of capital cities was first based on the Theory of Choosing the Center (3rd century BCE) and the Theory of Conforming to Nature (5th–3rd century BCE). However, the final maturation of this urban morphology, including the water system, was closely related to the Theory of Symbolizing and Modeling Heaven and Earth (4th–3rd century BCE), in a way that manifested the imperial power's organization and control of space and time. Through close analysis of historical documents, archaeological reports and modern investigations, the paper aims to clarify, analyze and summarize the historical context and evolution, functional and structural characteristics, as well as the economic, political, cultural and military connotations of water systems in Chang'an. It argues that the coordination of urban construction and the water environment was a key foundation for capital city development. It proposes that people shaped urban water supply in many ways, including daily life, waterway transportation, agricultural irrigation, aquaculture promotion, military defense and fire prevention. The water system in Chang'an also provided an important place for royalty and nobility to go fishing, to hunt and to engage in leisure and naval training. The landscape with this water system as the core, including Taiye Lake and Kunming Lake, had also inspired Chinese gardening history, and had a profound impact on future generations. More importantly, the capital's urban morphology design was a miniature of the world recognized by the monarch, as well as the symbolic image of the supreme rulers' political and cultural desire to control and possess Tianxia, which essentially means the whole world. In conclusion, the paper calls for a closer study of water-based design as a foundation for urban planning.