The Herschel Space Observatory is well suited to address several important questions in star-and planet formation, as is evident from its first year of operation. This paper focuses on observations of water, a key molecule in the physics and chemistry of star-formation. In the WISH Key Program, a comprehensive set of water lines is being obtained with the HIFI and PACS instruments toward a large sample of well-characterized protostars, covering a wide range of luminosities and evolutionary stages. Lines of H2O, CO and their isotopologues, as well as chemically related hydrides, [O I] and [C II] are observed. Together, the data determine the abundance of water in cold and warm gas, reveal the entire CO ladder up to 4000 K above ground, elucidate the physical processes responsible for the warm gas (passive heating, UV or Xray-heating, shocks), quantify the main cooling agents, and probe dynamical processes associated with forming stars and planets.