Homogeneous charge compression ignition (HCCI) is a part load, low-temperature combustion process which operates at lean mixtures and produces ultra-low NOX emissions. As opposed to SI engines that use a spark to control combustion timing, HCCI combustion is enabled by compression induced autoignition which is characterized by rapid global and spatial combustion yielding fuel efficiency benefits. This process is highly dependent on the in-cylinder state, including pressure, temperature and trapped mass. The absence of a direct combustion control proves to be a major challenge and results in unstable engine operation especially at the limits of the narrow operation range. In recent studies, direct water injection is used in HCCI combustion to stabilize combustion and increase the operation range. This paper outlines the thermodynamic influence and evaluation of the potential of water injection for HCCI combustion. Investigations were performed on two single cylinder research engines using different fuels to investigate the effect of direct water injection on HCCI combustion. In this work, the required energy to achieve autoignition is obtained using internal exhaust gas recirculation which is controlled via negative valve overlap. Steady state water injection timing, pressure and mass sweeps were performed to analyze the influence on HCCI combustion. Based on these single cylinder investigations, simulations were performed to simulate the effect of water on the amount of residual gas, in-cylinder temperature and rate of heat release. In addition, cyclic water injection investigations were performed, to separate the long term from the short term cooling effects. The results show a significant reduction of 44.5 % in NOX emissions when injecting water every cycle, and even a 12.2 % reduction when injecting water every 2 cycles. This trade-off between water consumption, combustion phasing and NOX emissions reduction can be useful for optimization in future control applications.