This study evaluates the potential of implementing rainwater harvesting (RWH) as an alternate source of water, capable of meeting the domestic outdoor demand, for dry and wet regions of the United States. As the representatives of dry and wet regions, the states of Arizona and Florida were selected, respectively. An interactive system dynamics model was developed using Stella that considered historical rainfall amount, population growth, outdoor water demand, number of households, and different climate scenarios as the predictors of the model. Monthly rainfall data for 10 years i.e., 2005 to 2014 were used and dataset was projected for the upcoming 10 years using the near term climate projections from US Environmental Protection Agency. The model results were used to compare the domestic outdoor demand and the amount of water that can be generated using RWH for the upcoming years. The user of the model had control over two different sets of parameters. The first set, known as the primary set, included percentage of per capita water used for outdoor water demand, percentage of existing households with RWH, percentage of future households (to be built) with RWH, and percentage of population using desert landscaping. The desert landscaping parameter was introduced to supplement the reduction of outdoor water use in arid areas. The second set of parameters, known as the secondary set, included capture ratio of the roof (depends on the roof material), reduction factor due to the effect of antecedent dry period, and parameters of the governing equation. Both primary and secondary set of parameters allowed the user to perform sensitivity analyses and evaluate different scenarios. The results indicated that for wet regions, such as the state of Florida, RWH was already a viable option. In fact, for such regions, advanced cisterns with water treatment facilities can be used to meet some indoor water demand as well, since there would be excess after using for outdoor purposes. For dry states, such as Arizona, to make RWH a feasible option, all the parameters of the primary set need to be adjusted. To store the water generated from RWH, a 50-gallon rainwater barrel was selected, which was found to be capable of storing 42% of the water generated from a typical household rooftop for the state of Arizona. The study presented an “achievable scenario”, with adjustments of the parameters from the primary set, which showed potential of meeting 60% of the total domestic outdoor demand for the state of Arizona. The results indicated that RWH could be a feasible option even for some dry states with limited rainfall. This model allows the water managers to test different assumption and evaluate the potential of RWH under multiple climate scenarios.