This is the process I used to create the water drop icon in Illustrator for one of the five Nede funds, each of which have their own icon. This particular icon represents the Clean Water Fund which is setup to help the 1 billion people on the planet without access to clean water or proper sanitation.

From Circle to Drop

The first step was to create a simple circle and stretch it's top-most point using the Direct Selection Tool (the white arrow). Once the top of the drop was at the height I wanted I converted the anchor point to the "corner" setting instead of the "smooth" setting it was on by default which was giving it a rounded look. By now it already had the proper water droplet shape.

Adding Water Effects

Next I needed to add some shapes that I could put gradients and transparency effects on that could give the drop a translucent quality. After staring at it long enough, it started to look more "vectory" than real, but I found that after it was done and I came back to it later it looked pretty real again. Anyway, to create the shapes I basically made a bunch of duplicates of the main water drop shape and kind of layered them on top of each other and then used the pathfinder tools to cut out the shapes I wanted. I also overlayed my own shapes over the droplet copies which resulted in the shapes shown above. It's important to note that I never touched the original droplet - I only edited copies. Once I combined all the shapes I chose some colors using kuler.

Final Product

What do you think?