In the modern global economy, water and energy are fundamentally connected. Water already plays a major role in electricity generation and, with biofuels and electricity poised to gain a significant share of the transportation fuel market, water will become significantly more important for transportation energy as well. This research provides insight into the potential changes in water use resulting from increased biofuel or electricity production for transportation energy, as well as the greenhouse gas and freshwater implications. It is shown that when characterizing the water impact of transportation energy, incorporating indirect water use and defensible allocation techniques have a major impact on the final results, with anywhere between an 82% increase and a 250% decrease in the water footprint if evaporative losses from hydroelectric power are excluded. The greenhouse gas impact results indicate that placing cellulosic biorefineries in areas where water must be supplied using alternative means, such as desalination, wastewater recycling, or importation can increase the fuel’s total greenhouse gas footprint by up to 47%. The results also show that the production of ethanol and petroleum fuels burden already overpumped aquifers, whereas electricity production is far less dependent on groundwater.