The present invention describes a liquid recycling system and method for purifying and either recirculating or discarding of liquid. The system includes a liquid input line, a tank, and a circulation pump for providing recirculation of liquid from the tank. A filter and a heater are used to treat liquid from the circulation pump. A valve is provided to direct liquid either to a shower head or faucet, or back to the tank. Additional plumbing and components can be used to provide multiple independent recirculation loops with the tank. An electronic controller can be used to control components of the present invention, where a user could interface with the controller via a control panel or a software application accessed by a portable electronic device.