The solar water-heating (SWH) system is one of the most convenient applications of solar energy, which is considered an available, economical, and environmentally friendly energy source to fulfill the energy demands of the world. In this review, existing SWH systems and design aspects of major components e.g., solar thermal collector, storage tank, heat exchanger, heat transferring fluid, absorber plate, etc. were extensively studied. Recent research to further improve SWH systems and potential practical applications are critically reviewed. Moreover, a relatively new concept in SWH systems, which is using nanofluids in solar collectors as heat transfer fluid has been studied in terms of design criteria for the development of SWH systems. Stationary flat plate collector (FPC) and single-axis tracking compound parabolic collector (CPC) exhibit thermal efficiencies of 45–60 % (operating range: 25–100 °C) and 30–50 % (operating range: 60–300 °C), respectively. The use of thermal stratification structures e.g., diffusers, baffles, membranes, fabrics, etc. is an effective tool to reduce heat losses from the storage tank as well as to harvest the highest energy from the solar collector. Coating of nanomaterials e.g., nickel, copper, etc. was found to reduce the backside heat loss in SWJ systems which eventually increases the thermal performance of the system. Nanofluids consisting of multiwall carbon nanotubes (MWCNTs) and Al2O3 increased the effectiveness of FPC by 28.3 and 35 %, respectively. Moreover, using CuO nanofluids, the collector efficiency of a typical evacuated tube collector (ETC) was increased by up to 12.4 %. Several potential future recommendations for improving the performance of the SWH system were stated.