Membrane capacitive deionization (MCDI) is a low-cost technology for desalination. Typically, MCDI electrodes are fabricated using a slurry of nanoparticles in an organic solvent along with polyvinylidene fluoride (PVDF) polymeric binder. Recent studies of the environmental impact of CDI have pointed to the organic solvents used in the fabrication of CDI electrodes as key contributors to the overall environmental impact of the technology. Here, we report a scalable, aqueous processing approach to prepare MCDI electrodes using water-soluble polymer poly(vinyl alcohol) (PVA) as a binder and ion-exchange polymer. Electrodes are prepared by depositing aqueous slurry of activated carbon and PVA binder followed by coating with a thin layer of PVA-based cation- or anion-exchange polymer. When coated with ion-exchange layers, the PVA-bound electrodes exhibit salt adsorption capacities up to 14.4 mg/g and charge efficiencies up to 86.3%, higher than typically achieved for activated carbon electrodes with a hydrophobic polymer binder and ion-exchange membranes (5–13 mg/g). Furthermore, when paired with low-resistance commercial ion-exchange membranes, salt adsorption capacities exceed 18 mg/g. Our overall approach demonstrates a simple, environmentally friendly, cost-effective, and scalable method for the fabrication of high-capacity MCDI electrodes.