The overshot wheel is a much more efficient wheel than the undershot; it can harness over 85% of the potential energy in falling water. However, it is more difficult to build, requires careful site preparation, and will not operate in many locations.

Mounted vertically on a horizontal axle, it has angled troughs—also called buckets—mounted all around the rim. Water fills these buckets from above, making one side of the wheel heavy and causing it to turn as the water in the buckets falls. At the bottom the buckets are in an inverted position so that they spill out the used water, which flows gently away. While the water filling the buckets has a slight force upon the wheel, the overshot is primarily a gravity wheel in that it is the dead weight of water in the buckets that causes it to turn.

This large diameter wheel can generate a great deal of torque—twisting power. Its size means it cannot turn very rapidly, however, and so machinery that needs to run at higher speeds must use gears to increase the speed of rotation. But gears add cost, increase maintenance, and rob some power.

Overshot wheels cannot turn when the water cannot freely flow away from them, a condition known as back-water, or wading. Finally, many sites cannot accommodate an overshot wheel because there is not enough head, or drop to the water, to reach the top of the wheel.