To investigate the effect of water on the crack evolution and damage mode of sandstone, uniaxial compression experiments were conducted using samples with different water contents. The damage evolution process of sandstones with different water contents was investigated based on acoustic emission (AE) and digital image correlation (DIC) techniques. Further, the crack evolution was conducted using the RA-AF distribution method. The results showed that the brittleness of sandstone weakened with increasing water content, and the uniaxial compressive strength (UCS) and elastic modulus decreased significantly. The percentage of shear cracks increased continuously from 21.1% when dry to 36.53% when saturated and the evolution of these cracks through AE signals correlates closely with DIC observations. However, the influence of water on the development of these cracks differs significantly. Through the separation analysis of the two types of cracks, the damage evolution law of sandstone is clearer. Based on the critical slowing down theory (CSDT), the point at which both tensile and shear crack signals undergo abrupt fluctuation serves as an early warning indicator. The early warning point identification results of the sandstone with different water contents are all in the crack extension stage, the stress levels are all near 0.9 and demonstrate reliable predictive capabilities. Furthermore, the mechanism of water’s impact on the transition of crack types and the differences in damage modes in sandstone during the initial and later loading stages is explained by analyzing the characteristics of tensile and shear crack emergence and expansion.