Modern energy systems use large amounts of water for electric power production. This has important impacts on future water management and energy system planning decisions. In this study, we quantify the physical water use of power production and virtual water transfer via power transmission between Chinese provinces using the information on 5408 electricity-generating units and interprovincial power transmission. We show that China’s power production withdrew 62.7 billion m³ of freshwater in 2017, of which 13 billion m³ was consumed (i.e. not returned to the original water basin but lost via evaporation, etc.). A large volume of freshwater was virtually traded through the transmission system. Overall, 6.2 billion m³ of freshwater withdrawal and 2.1 billion m³ of water consumption was traded. Nationally, power transmission reduced freshwater withdrawal but increased consumption in China because, compared to the east, the west generally has a larger water consumption factor but a lower withdrawal factor. Water stress was more equally distributed across provinces through power transmission. We find large seasonal variations in inter-regional virtual water consumption transfer, with an August peak. While the Yangtze River basin and downstream of the Yellow River basin have abundant water relative to other basins, the many power plants located along the two rivers aggravate local water stress. These dynamics will become increasingly important for policymakers and energy planners as China undergoes climatic changes and a rapid energy transition.