A refrigeration cycle apparatus includes a hot water tank, a heat source for heating water in the hot water tank, and a refrigeration cycle circuit that includes an indoor heat exchanger, a heat-source heat exchanger, and a water heat exchanger. The indoor heat exchanger may operate as a condenser. When an outside temperature is greater than a specified temperature, the refrigeration cycle apparatus operates in a first state in which the heat-source heat exchanger operates as an evaporator and the water heat exchanger does not operate. When the outside temperature is less than the specified temperature, the refrigeration cycle apparatus operates in a second state in which the water heat exchanger operates as an evaporator and refrigerant therein absorbs heat from water in the hot water tank heated by the heat source and the heat-source heat exchanger does not operate.