A waterwheel is a type of device that takes advantage of flowing or falling water to generate power by using a set of paddles mounted around a wheel. The falling force of the water pushes the paddles, rotating a wheel. This rotation of a wheel can be transmitted to a variety of machines through a shaft at the center of the wheel. These wheels are generally large and composed of wood or metal with many blades or buckets along the edge of the wheel to capture the power of the moving water.

Waterwheels are usually positioned vertically over a water source. This means that the axle is positioned horizontally. This axle transfers the energy from the falling water to a drive belt or a system of gears that then operates some sort of machine. These wheels require some source of falling or flowing water, and these sources can include streams or rivers. Sometimes special ponds known as mill ponds were created by damming a flowing stream. This creates a special channel known as a mill race from the pond to the waterwheel.

Although waterwheels are not used widely today, hydroelectric dams function on the same basic principle of using the power of flowing water to move machines known as turbines.