<p>This paper presents a systematic literature review on the application of circular economy (CE) principles to water management in the tourism sector and its contribution to territorial value creation. Tourism is highly dependent on water resources and is strongly embedded in the territories where it develops, making water management a critical dimension for sustainability, resilience, and destination competitiveness. Despite the growing recognition of water as a strategic resource for tourism destinations, the extent to which CE-based water management can act as a driver of territorial value creation — rather than merely as an environmental mitigation tool — remains insufficiently explored in the literature, representing a significant gap at the intersection of circular economy, water governance, and tourism studies. By adopting a circular economy perspective, water can be managed not only as a resource to be conserved, but also as a lever for environmental improvement, socio-economic development, and the creation of tourism value at the territorial level. The review was conducted using the Scopus database in July 2025 — selected for its broader journal coverage in the social sciences and tourism domains relative to Web of Science — and comprises an in-depth analysis of 36 peer-reviewed scientific articles. The results indicate that the application of circular economy principles to tourism water management remains at an early stage, with most initiatives focusing on isolated, end-of-pipe, or efficiency-oriented measures rather than on integrated, preventive territorial strategies. Nevertheless, the literature identifies several pathways through which circular water practices in tourism can contribute to territorial value creation, including improved environmental quality, enhanced destination image, increased resilience to water scarcity, and strengthened local development. The findings highlight a significant research gap in systemic, multi-scale approaches and robust assessment frameworks capable of capturing the territorial impacts of circular-economy-based water management in tourism. This review directly addresses that gap by providing the first systematic synthesis of how CE principles are applied to tourism water management and by explicitly mapping their implications for territorial value creation across environmental, economic, and governance dimensions. The paper concludes by proposing a research agenda to advance systemic, multi-scale assessment frameworks and governance models that operationalise circular water strategies as drivers of sustainable tourism and territorial development.</p>