Drinking too much water can have negative effects on health in some circumstances. Most commonly, it can lead to a condition known as water intoxication. Water intoxication, or water poisoning, occurs when so much water is consumed that the normal levels of electrolytes (e.g. sodium, potassium, calcium) become extremely diluted.
Electrolyte concentration in the body is important for a number of reasons, most importantly for the nervous system in neurotransmission, and for muscles to contract. It's the passage of electrolytes into and out of cells that allows for these processes to take place, and maintaining normal levels of electrolytes is critical. Therefore, when electrolytes become diluted, physiological functions are disrupted and a person can begin to show signs of water poisoning (vomiting, headache, confusion, weakness, fatigue, appetite loss).