AbstractTo improve both scale and fidelity of numerical water wave simulations to study the evolution of wave fields within offshore engineering, it is of key practical interest to achieve high numerical efficiency. We propose a p-multigrid accelerated time-domain scheme for efficient and $${\mathcal {O}}(n \log n)$$ O ( n log n ) -scalable solution of a hybrid-spectral model for the simulation of highly nonlinear and highly dispersive water waves, the accurate calculation of wave kinematics and taking into account varying water depth. To achieve low numerical dispersive and dissipate errors, a high-order hybrid-spectral collocation scheme is implemented to solve the fully nonlinear potential flow (FNPF) equations, and utilizing a p-multigrid iterative solver scheme for solving the Laplace problem. Hereby, the numerical scheme combines the high accuracy of spectral methods, high efficiency of the fast Fourier transform (FFT) algorithm, and multigrid methods. Numerical analysis is performed to evaluate the performance and confirm the spectral accuracy of the scheme. Numerical experiments are considered for steady nonlinear wave propagation. A Fourier-continuation technique is used to extend the scheme from a periodic domain setup to perform benchmarks in a finite domain setup for numerical wave tanks utilizing conventional techniques for wave generation and absorption, and with results in excellent agreement with experimental measurements.