Feed and water efficiency are two vital economic and agricultural traits. Selection for phenotypic feed efficiency has tremendously improved livestock productivity over the past 50 years. However, there have been a number of undesirable changes in the regulation of energy homeostasis and probably water balance associated with this success. Feed and water efficiency encompasses complex mechanisms regulating feed and water intake, energy expenditure, water retention and excretion, and intermediary metabolism related to nutrient and water utilization and partition. Knowledge of these should be used to guide more effective selection. This chapter focuses first on feed intake regulation, offering a review of current understanding of both central feed intake regulation and peripheral and hormonal regulation. It then turns to the issue of the regulation of water homeostasis. It aims to facilitate further progress by asking new questions which may help in developing mechanisms-based strategies to improve both feed and water efficiency.