Production and consumption activities deplete freshwater, generate water pollution and may further lead to water stress. The accurate measurement of water stress is a precondition for sustainable water management. This paper reviews the literature on physical water stress induced by blue and green water use and by water pollution. Specifically, we clarify several key concepts (i.e., water stress, scarcity, availability, withdrawal, consumption and the water footprint) for water stress evaluation, and review physical water stress indicators in terms of quantity and quality. Furthermore, we identify research gaps in physical water stress assessment, related to environmental flow requirements, return flows, outsourcing of water pollution and standardization of terminology and approaches. These research gaps can serve as venues for further research dealing with the evaluation and reduction of water stress.