Access to safe and affordable drinking water continues to be a challenge in India, especially among underserved urban communities, and rural areas. This study presents the design, fabrication, and evaluation of a modular, gravity driven household water filtration system with a real-time water quality monitoring prototype. The filtration unit utilizes natural and biodegradable filter materials (i.e., gravel, sand, hemp fabric, xylem wood from Pinus roxburghii (Chir Pine), and activated carbon) through a sequenced multi-layered filter configuration targeting physical, microbial and chemical contaminants. The xylem filter, which are hexagonally shaped are sterilized sections of pinewood, achieve passive microfiltration through the capillary vessel system of the wood, which improves water clarity, and likely lowers bacterial loads. The activated carbon improves the chemical adsorption process, and improves taste, as well as reduces total dissolved solids (TDS) and electrical conductivity. The filtration system operates with a steady flow rate of 0.95–1.2 L/min, and successfully reduced turbidity, TDS (430 ppm to 210–240 ppm), electrical conductivity (700–850 µS/cm to 380–420 µS/cm), and salinity (0.45–0.26 ppt). Simultaneously, an IoT-based monitoring system was developed using an ESP32 microcontroller and pH, TDS, and temperature sensors. The monitoring system collects real-time water quality parameters which are displayed on an OLED screen and a customized smartphone application with an update latency time of less than 200 ms. The sensors demonstrated their expected accuracy. In conclusion, the integrated system presents a scalable, user-friendly, and affordable opportunity for decentralized water purification while also monitoring water quality. Aspects for further improvements include waterproof enclosures, mobile app that works offline, solar charging, and scalable deployment studies to legitimizing large scale use in contexts of limited resources.