One of the signposts of the star formation process is the emission of powerful, extremely bright maser radiation by water vapor. This talk presents the first comprehensive model for this phenomenon. In this model the masers occur behind high velocity shocks generated by powerful outflows around newly formed stars. Detailed numerical calculations of the shock structure and the maser pumping scheme show that the model can successfully explain the observations, a conclusion supported by various surveys. While the maser process itself is considered by now fairly well understood, the origin of the outflows that drive such shocks and the stage of the star formation process associated with the maser phase are still not known. Proper motion observations of W49, the most luminous maser in the Galaxy, are successfully explained by a model in which the masers outline the surface of an elongated cocoon, driven by twin high-velocity (~1200 km/s), young (~300 years) jets. Recent VLA observations of the water masers in W3(OH) provide independent evidence for such jets. The evolution of maser emission from jet-driven cocoons and its implication to star-forming regions will be discussed.