The Kampong Ayer Water Village is located in Brunei's capital city Bandar Seri Begawan that is situated in the middle of the Brunei River. 39,000 people live in the Water Village. This represents roughly ten percent of the nation's total population. All of the Water Village buildings are constructed on stilts above the Brunei River. The Water Village is really made up of small villages linked together by more than 29,140 meters of foot-bridges, consisting of over 4200 structures including homes, mosques, restaurants, shops, a school, and a hospital. 36 kilometres of boardwalks connect the buildings. Private water taxis provide rapid transit. Most of these taxis resemble long wooden speed boats. From a distance the water village looks like a slum. It actually enjoys modern amenities including air conditioning, satellite television, Internet access, plumbing, and electricity. Some of the residents keep potted plants and chickens.

The district has a unique architectural heritage of wooden homes with ornate interiors. People have lived in Kampong Ayer for over 1300 years. Antonio Pigafetta dubbed it the Venice of the East when the fleet of Ferdinand Magellan visited in 1521. The district is a culturally important part of Brunei that preserves the nation's river dwelling origins. According to geography professor Abdul Aziz of the University Brunei Darussalam, this is the largest and most famous water settlement of Southeast Asia. "It was historically the very core of Brunei and one of the most important centres of trade in Borneo." In order to preserve Kampong Ayer as Brunei Darussalam's most valuable heritage, the Government through the District Office has provided it with numerous facilities including foot-bridges, concrete jetties, piped water, electricity supplies telephones, a school, mosques, clinics, a police station and a marine fire station. All of the six water village districts are collectively known as the water village (Kampong Ayer) but are identified as separate districts for administrative purposes.