In a saucepan, combine the water and sugar and bring to a boil over medium-high heat, stirring to dissolve the sugar. Add the cranberries, reduce the heat to low, and simmer just until all the cranberries pop, about 10 minutes.
Remove from the heat, skim off the foam with a large spoon, and let the sauce cool to room temperature. (The sauce will keep in an airtight container in the refrigerator for up to 3 days.) Serve at room temperature or chill in the refrigerator and serve cold.