The generation-to-generation information technology (IT) performance and density demands continue to drive innovation in data center cooling technologies. For many applications, the ability to efficiently deliver cooling via traditional chilled air cooling approaches has become inadequate. Water cooling has been used in data centers for more than 50 years to improve heat dissipation, boost performance, and increase efficiency. While water cooling can undoubtedly have a higher initial capital cost, water cooling can be very cost effective when looking at the true life cycle cost of a water-cooled data center. This study aims at addressing how one should evaluate the true total cost of ownership (TCO) for water-cooled data centers by considering the combined capital and operational cost for both the IT systems and the data center facility. It compares several metrics, including return-on-investment for three cooling technologies: traditional air cooling, rack-level cooling using rear door heat exchangers, and direct water cooling (DWC) via cold plates. The results highlight several important variables, namely, IT power, data center location, site electric utility cost, and construction costs and how each of these influences the TCO of water cooling. The study further looks at implementing water cooling as part of a new data center construction project versus a retrofit or upgrade into an existing data center facility.