Rinse cranberries and add to a medium saucepan.
Add the dried cherries and sugar to the saucepan. Add the water. Stir to incorporate.
Bring to a boil. The cranberries will begin to burst.
Reduce heat and simmer until sauce thickens and becomes syrupy. Stir occasionally, until almost all of the berries have burst, approximately 20-25 minutes.
Allow the sauce to cool slightly. Transfer to a storage container with a lid. Place plastic wrap directly on top of the sauce and press down to make contact, to seal out any air. Place the lid on the container and store in the refrigerator.
The sauce can be made ahead of time and stored in the refrigerator for a few weeks. Transfer to a serving dish for your holiday meal or store in a mason jar if using to enjoy as a jam or jelly.