The 3D physical model with two different structure of the electrical water heater was built. The performance of water heater was studied by computer fluid dynamics simulation (CFD). The heater performance is characterized the discharge efficiency, extraction efficiency and fraction of heat recoverable. It was 73.7%, 45% and 49.8% respectively with conventional structure, and it was 81.1%, 54.1% and 59.6% respectively of improved structure with discharge rate was 5L/min when all initial hot water temperature was 90°C. The temperature distribution of different discharged stage was also disclosure. The water inner the water tank of improved structure has the better thermal stratification than traditional structure. It was also agreed with the water heat performance.