Reaction rate acceleration using green methods is an intriguing area of research for chemists. In this regard, water as a “green solvent” plays a crucial role in the acceleration of some organic transformations and reveals exclusive selectivity and reactivity in comparison with conventional organic solvents. In particular, multicomponent reactions (MCRs) as sustainable tools lead to the rapid generation of small-molecule libraries in water and aqueous media due to the prominent role of the hydrophobic effect. MCRs, as diversity-oriented synthesis (DOS) methods, have great efficiency with simple operations, atom, pot, and step economy synthesis, and mechanistic beauty. Among diverse classes of MCRs, isocyanide-based multicomponent reactions (I-MCRs), as sustainable and versatile reactions, have gained considerable attention in the synthesis of diverse heterocycle rings, especially in drug design because of the peculiar nature of isocyanide as a particular active reactant. I-MCRs that are performed in water are mild, environmentally friendly, and easily controlled, and have a reduced number of workup, purification, and extraction steps, which fit well with the advantages of “green” chemistry. Performing these powerful organic transformations in water and aqueous media is accompanied by acceleration owing to negative activation volumes, which originate from connecting several reactants together to generate a single product. It should be noted that the combination of MCR strategy and aqueous phase reaction is of growing interest for the development of sustainable synthetic techniques in organic conversions. However, an exclusive account focusing on the recent progress in eco-friendly I-MCRs for the construction of heterocycles in water and aqueous media is particularly lacking. This review highlights the progress of various kinds of I-MCRs in water and aqueous media as benign methods for the efficient construction of vital heterocyclic scaffolds, with a critical discussion of the subject in the period 2000–2021. We hope that this themed collection will be of interest and beneficial for organic and pharmaceutical chemists and will inspire more reaction development in this fascinating field.