People climb into the plastic, airtight balls and then roll around -- or try to walk -- on water in pools, lakes or rivers.
"We want to tell the public how dangerous these products are before someone is killed," said Inez Tenenbaum, chairman of the commission. "Our investigation into water walking balls will not stop with today's warning."
The agency is worried about too little oxygen in the balls as well as the buildup of carbon dioxide.
Another concern: the fact that the product has no emergency exit and can be opened only by a person outside of the ball -- a serious problem if a person inside the ball experiences distress.
The commission said it is aware of two incidents in which people were hurt.
In the first, a 5-year-old girl in Kingston, Mass., passed out last year while inside a ball for a brief time. In the other, a young boy suffered a broken arm when the ball he was in fell out of a shallow above-ground pool onto the hard ground.
The balls, CPSC says, could also spring a leak or puncture, raising the drowning risk, especially with young children who can't swim.
Calls to manufacturers such as Eurobungy USA in Miami were not immediately returned.
One company that sells the water balls says on its website that there is enough oxygen to last 30 minutes. It says a ride usually lasts about 7-10 minutes, and that the balls are not dangerous as long as they are used safely.
The commission said it has informed state amusement ride officials of the risks associated with the water walking balls. It is encouraging state officials not to allow the rides.