Alkaline water electrolysis is one of the easiest methods for hydrogen production, offering the advantage of simplicity. The challenges for widespread use of water electrolysis are to reduce energy consumption, cost and maintenance and to increase reliability, durability and safety. This literature review examines the current state of knowledge and technology of hydrogen production by water electrolysis and identifies areas where R&D effort is needed in order to improve this technology. Following an overview of the fundamentals of alkaline water electrolysis, an electrical circuit analogy of resistances in the electrolysis system is introduced. The resistances are classified into three categories, namely the electrical resistances, the reaction resistances and the transport resistances. This is followed by a thorough analysis of each of the resistances, by means of thermodynamics and kinetics, to provide a scientific guidance to minimising the resistance in order to achieve a greater efficiency of alkaline water electrolysis. The thermodynamic analysis defines various electrolysis efficiencies based on theoretical energy input and cell voltage, respectively. These efficiencies are then employed to compare different electrolysis cell designs and to identify the means to overcome the key resistances for efficiency improvement. The kinetic analysis reveals the dependence of reaction resistances on the alkaline concentration, ion transfer, and reaction sites on the electrode surface, the latter is determined by the electrode materials. A quantitative relationship between the cell voltage components and current density is established, which links all the resistances and manifests the importance of reaction resistances and bubble resistances. The important effect of gas bubbles formed on the electrode surface and the need to minimise the ion transport resistance are highlighted. The historical development and continuous improvement in the alkaline water electrolysis technology are examined and different water electrolysis technologies are systematically compared using a set of the practical parameters derived from the thermodynamic and kinetic analyses. In addition to the efficiency improvements, the needs for reduction in equipment and maintenance costs, and improvement in reliability and durability are also established. The future research needs are also discussed from the aspects of electrode materials, electrolyte additives and bubble management, serving as a comprehensive guide for continuous development of the water electrolysis technology. (C) 2009 Elsevier Ltd. All rights reserved.