Recent developments in high- and middle-income countries have exhibited a shift from conventional urban water systems to alternative solutions that are more diverse in source separation, decentralization, and modularization. These solutions include non-grid, small-grid, and hybrid systems to address such pressing global challenges as climate change, eutrophication, and rapid urbanization. They close loops, recover valuable resources, and adapt quickly to changing boundary conditions such as population size. Moving to such alternative solutions requires both technical and social innovations to co-evolve over time into integrated socio-technical urban water systems. Current implementations of alternative systems in high- and middle-income countries are promising, but they also underline the need for research questions to be addressed from technical, social, and transformative perspectives. Future research should apply a transdisciplinary research approach through socio-technical "lighthouse" projects that apply alternative urban water systems at scale. Such research should leverage experience from lighthouse projects in a range of socio-economic contexts, identify their potentials and limitations from an integrated perspective, and share their successes and failures across the urban water sector.