In December 1988, Hirasawa decided to put his post-punk/new wave band P-Model on hiatus after spending two years being unable to arrange a recording deal, feeling that the group's continued existence was taking a mental and emotional toll on him.

[3] Two songs from lo-fi cassette only releases (Scuba and Charity Original Tape) were also rearranged for the album, with Hirasawa wanting a better form for the former[3] and the latter being a guideline for the style of Water in Time and Space.

[5] Water in Time and Space features a large variety of styles, such as march, orchestral, western and folk, influenced by Jungian, New Age and Andean themes.

Water in Time and Space is built around the Korg M1 workstation synthesizer, whose expansive, organic-sounding palette completely replaces the digital tones from the Casio synths used by the P-Model in their later years.

The M1's built-in sequencer and its large memory bank led to a shift in Hirasawa's production style; with the M1, he could record parts of songs that were not completed in studio at home, being more equipped to make music by himself and less dependent on labels.