In recent years, with the development of technology in materials and machining, it is becoming possible to produce modern water hydraulic components that are made of lubricant-free and anticorrosive materials and to achieve very close tolerances to reduce internal leakage due to the low viscosity of water. As water is nontoxic, environmentally friendly, and readily available, many industries are already turning to modern water hydraulic systems to replace their oil hydraulic counterparts. As with all systems, the increasing use of water hydraulic systems by more industries will result in a greater need to monitor and maintain the systems. This paper is concerned with online testing and fault diagnosis of loaded modern water hydraulic cylinders and axial piston motors. LabVIEW® (Laboratory Virtual Instrument Engineering Workbench) data acquisition hardware and development software were used for data acquisition and processing. Likely real-life faults were simulated on the hydraulic actuators' internal components. The actuators also were operated to capture their unique vibration signals in their faulty states and the results compared with reference signatures of the same actuators when they were in their new or healthy states. The vibration signatures and amplitude spectra, average extension/retraction duration, and flow trending amplitude of the water hydraulic actuators versus piston seal wear, rod seal wear, piston shoe wear, and capstan surface wear under different operating conditions of simulated loads and speeds are presented and discussed. The results show that there is a distinctive variation in vibration signals, flow rate, and average stroking duration with increase in loads for both actuators.