Overdependency on ground water resources for meeting the daily water demand in Dhaka City is leading to excessive pressure on ground water aquifer systems and is deepening the ground water table every year. This paper focuses on how reuse of grey water generated from different sources of domestic purposes every day can alter the considerable daily water demand in this city. Sampling and characterization of grey water was accomplished according to different types of residential sources such as water from brushing, bathing, floor washing and laundry. In Dhaka City, household average grey water generation is 85 L per capita per day, which is 60% of the total waste water generated in a house in a day. After reclamation, this grey water can be reused for toilet flushing, gardening, car washing and fire fighting, which can play a crucial role of meeting city water demand since reusable grey water generation is around two times greater than the total demand of water for those purposes. During characterization, emphasis was given to the determination of basic parameters like pH, turbidity, colour, solid content, bio-chemical oxygen demand (BOD), chemical oxygen demand (COD), total coliform (TC) and faecal coliform (FC). Among all the grey water sources, laundry water was found to be the most contaminated. Aesthetic quality of grey water is another issue of public acceptance.