Biogeochemical processes in plants, such as photosynthesis, evaporation and net primary production, are directly related to foliar water. Therefore, canopy water content is important for the understanding of the terrestrial ecosystem functioning. Spectral information related to the water absorption features at 970 nm and 1200 nm offers possibilities for deriving information on leaf and canopy water content. Hyperspectral reflectance data representing a range of canopies were simulated at the leaf level using the PROSPECT model and at the canopy level using the combined PROSPECT+SAILH model. The simulations were in particular used to study the spectral information related to the water absorption features at about 970 nm and 1200 nm. At the leaf level this information was related to the leaf water content. At the canopy level this information was related to the leaf area index (LAI) and the canopy water content (CWC). In particular derivative spectra close to these absorption features showed a strong predictive power for the leaf and canopy water content. Ratio indices defining the absorption features had a smaller predictive power. The feasibility of using information from the water absorption features in the near-infrared (NIR) region of the spectrum was tested by estimating canopy water content for two test sites with different canopy structure. The first site was a homogeneously managed agricultural field with a grass/clover mixture and with very little variation within the field, being part of the Droevendaal experimental farm at Wageningen, the Netherlands. The other site was a heterogeneous natural area in the floodplain Millingerwaard along the river Waal in the Netherlands. Spectral information at both test sites was obtained with an ASD FieldSpec spectrometer during the summer of 2004 and 2005, respectively. Individual spectral bands and traditional vegetation indices based on red and NIR spectral bands yielded moderate estimates for CWC. Ratio indices describing the absorption features clearly yielded better results. Best results were obtained for the derivative spectra. Highest correlation with CWC was obtained for the derivative spectrum at the slopes of the first water absorption feature. However, here absorption by atmospheric water vapour also should be taken into account, yielding a preference for the right shoulder at about 1040 nm.