Mexican actress Carmen Yarira Noriega Esparza, 27, vanished in February last year and had been missing for about 10 months.
Friends and family feared she had been kidnapped by human traffickers and sold as a sex slave.
According to reports via AsianTown, Ms Esparza's severely decayed body was discovered in the tank after residents in the building complained that the drinking water tasted funny.
Mexico City Police fear Ms Esparza's body may have been decaying in the water tank since her disappearance.
Ms Esparza, who had graduated as a psychologist and dreamed of an acting career, was last seen leaving her gym in the Mexican capital in February last year.
Friends and family set up a social media campaign to try and find her, and took to the streets to post up her photographs in the hope that someone might recognise her.
Pal Javier Paz, 30, said: 'She was a talented and beautiful women who dreamed of being an actress.
'When she failed to turn up at the clinic where she worked, we all thought that she might have been kidnapped and sold off into the sex trafficking industry. But it seems that her body was back in her apartment block the whole time.'
Police are now focusing their enquiries on Ms Esparza's former partner, a wealthy businessman who had been paying the rent for her flat.Ms Esparza had recently ended the relationship after meeting a wealthy lawyer, and disappeared just one week before she was supposed to move out of the flat, local news reports.
The discovery of the body has stunned Ms Esparza's friends and family who are demanding to know how it could have escaped notice for so long.
It has also shocked her neighbours, whose drinking water from the tank had long had a strange taste, which has now been found to have stemmed from Ms Esparza's slowly decaying body.
A police spokesman said: 'City officials were called to the tank and when they opened it up they found the body in a high state of putrefaction.
'The body has been taken to the Institute of Forensic Sciences where a postmortem will be carried out to determine the exact cause of death.
'However she has already been identified as the missing woman from implants that she had as a result of a plastic surgery operation.
'We had a missing person report for her and had been looking into suggestions that she may have been taken by a gang involved in the sex slave business. It appears that was not the case.'