In this cross-sectional study, we measured the association between water provision and milk production on intensively managed small-scale grazing dairy herds. Farms (n = 53) were categorized according to water provision as follows: (1) Restricted-cows did not have access to a water trough while on pasture; and (2) Unrestricted-cows had free access to a water trough while on pasture. Herd main breed and feeding practices were included in a model to assess the effect of water provision category on farm average milk yield/cow/d. The effect of pasture condition and environmental variables on milk production were also assessed, however were not retained on the final model. Herds provided with unrestricted access to drinking water produced on average 1.7 L more milk per cow/d (p = 0.03) than herds with restricted access to drinking water. Predominantly Holstein herds produced 2.8 L more milk per cow/d (p < 0.01) than non-Holstein herds. Each extra kg of concentrate offered per day increased milk yield by 1.1 L/cow/d (p < 0.01). In conclusion, providing free access to drinking water while grazing was associated with greater milk production.