Almost 90% of freshwater resources consumed globally are used to produce plant and animal commodities. Water-scarce countries can balance their water needs by importing food from other countries. This process, known as virtual water transfer, represents the externalization of water use. The volume and geographic reach of virtual water transfers is increasing, but little is known about how these transfers redistribute the environmental costs of agricultural production. The grey water footprint quantifies the environmental costs of virtual water transfers. The grey water footprint is calculated as the amount of water necessary to reduce nitrogen concentrations from fertilizers and pesticides released into streams and aquifers to allowed standards. We reconstructed the global network of virtual grey water transfers for the period 1986–2010 based on international trade data and grey water footprints for 309 commodities. We tracked changes in the structure of the grey water transfer network with network and inequality statistics. Pollution is increasing and is becoming more strongly concentrated in only a handful of countries. The global external grey water footprint, the pollution created by countries outside of their borders, increased 136% during the period. The extent of externalization of pollution is highly unequal between countries, and most of this inequality is due to differences in social development status. Our results demonstrate a growing globalization of pollution due to virtual water transfers.