Canopy water content (CWC) is important for mapping and monitoring the condition of the terrestrial ecosystem. Spectral information related to the water absorption features at 970 nm and 1200 nm offers possibilities for deriving information on CWC. In this study, we compare the use of derivative spectra, spectral indices and continuum removal techniques for these regions. Hyperspectral reflectance data representing a range of canopies were simulated using the combined PROSPECT + SAILH model. Best results in estimating CWC were obtained by using spectral derivatives at the slopes of the 970 nm and 1200 nm water absorption features. Real data from two different test sites were analysed. Spectral information at both test sites was obtained with an ASD FieldSpec spectrometer, whereas at the second site HyMap airborne imaging spectrometer data were also acquired. Best results were obtained for the derivative spectra. In order to avoid the potential influence of atmospheric water vapour absorption bands the derivative of the reflectance on the right slope of the canopy water absorption feature at 970 nm can best be used for estimating CWC.