Chinese water dragon babies that are only 4 or 5 inches long may be kept in a 10-gallon aquarium, but they will eventually need to be moved to a larger terrarium. Sand is a recommended substrate material, as both male and female Chinese water dragons will dig burrows. All cages should have a hide-box area to provide a sense of security for the water dragon. Chinese water dragons are highly arboreal and should have branches within their enclosures. Chinese water dragons are also avid swimmers and need water containers that are large enough for them to immerse themselves and possibly swim in.

The Chinese water dragon is carnivorous, but will sometimes accept vegetables. Chinese water dragons may feed on adult mice, large comets (goldfish), day-old quail chicks, earthworms and various insects.

Day temperatures in the Chinese water dragon's cage should reach the mid-80s Fahrenheit, dropping to the mid 70s at night. Additional heat (up to the mid-90s Fahrenheit) can be supplied as a focal basking spot.