diff --git a/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGenerator.java b/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGenerator.java
new file mode 100644
index 0000000000..63d6a5b163
--- /dev/null
+++ b/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGenerator.java
@@ -0,0 +1,27 @@
+/*
+ * Copyright OpenSearch Contributors
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+package org.opensearch.sql.planner.streaming.watermark;
+
+import lombok.RequiredArgsConstructor;
+
+/**
+ * Watermark generator that generates watermark with bounded out-of-order delay.
+ */
+@RequiredArgsConstructor
+public class BoundedOutOfOrderWatermarkGenerator implements WatermarkGenerator {
+
+  /** The maximum out-of-order allowed in millisecond. */
+  private final long maxOutOfOrderAllowed;
+
+  /** The maximum timestamp seen so far in millisecond. */
+  private long maxTimestamp;
+
+  @Override
+  public long generate(long timestamp) {
+    maxTimestamp = Math.max(maxTimestamp, timestamp);
+    return (maxTimestamp - maxOutOfOrderAllowed - 1);
+  }
+}
diff --git a/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/WatermarkGenerator.java b/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/WatermarkGenerator.java
new file mode 100644
index 0000000000..4f4c9a8a00
--- /dev/null
+++ b/core/src/main/java/org/opensearch/sql/planner/streaming/watermark/WatermarkGenerator.java
@@ -0,0 +1,22 @@
+/*
+ * Copyright OpenSearch Contributors
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+package org.opensearch.sql.planner.streaming.watermark;
+
+/**
+ * A watermark generator generates watermark timestamp based on some strategy which is defined
+ * in implementation class.
+ */
+public interface WatermarkGenerator {
+
+  /**
+   * Generate watermark timestamp on the given event timestamp.
+   *
+   * @param timestamp event timestamp in millisecond
+   * @return watermark timestamp in millisecond
+   */
+  long generate(long timestamp);
+
+}
diff --git a/core/src/test/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGeneratorTest.java b/core/src/test/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGeneratorTest.java
new file mode 100644
index 0000000000..1d18a16f2a
--- /dev/null
+++ b/core/src/test/java/org/opensearch/sql/planner/streaming/watermark/BoundedOutOfOrderWatermarkGeneratorTest.java
@@ -0,0 +1,61 @@
+/*
+ * Copyright OpenSearch Contributors
+ * SPDX-License-Identifier: Apache-2.0
+ */
+
+package org.opensearch.sql.planner.streaming.watermark;
+
+import static org.junit.jupiter.api.Assertions.assertEquals;
+
+import org.junit.jupiter.api.Test;
+
+class BoundedOutOfOrderWatermarkGeneratorTest {
+
+  @Test
+  void shouldAdvanceWatermarkIfNewerEvent() {
+    assertWatermarkGenerator()
+        .thatAllowMaxDelay(100)
+        .afterSeenEventTime(1000)
+        .shouldGenerateWatermark(899)
+        .afterSeenEventTime(2000)
+        .shouldGenerateWatermark(1899);
+  }
+
+  @Test
+  void shouldNotAdvanceWatermarkIfLateEvent() {
+    assertWatermarkGenerator()
+        .thatAllowMaxDelay(100)
+        .afterSeenEventTime(1000)
+        .shouldGenerateWatermark(899)
+        .afterSeenEventTime(500)
+        .shouldGenerateWatermark(899)
+        .afterSeenEventTime(999)
+        .shouldGenerateWatermark(899);
+  }
+
+  private static AssertionHelper assertWatermarkGenerator() {
+    return new AssertionHelper();
+  }
+
+  private static class AssertionHelper {
+
+    private WatermarkGenerator generator;
+
+    private long actualResult;
+
+    public AssertionHelper thatAllowMaxDelay(long delay) {
+      this.generator = new BoundedOutOfOrderWatermarkGenerator(delay);
+      return this;
+    }
+
+    public AssertionHelper afterSeenEventTime(long timestamp) {
+      this.actualResult = generator.generate(timestamp);
+      return this;
+    }
+
+    public AssertionHelper shouldGenerateWatermark(long expected) {
+      assertEquals(expected, actualResult);
+      return this;
+    }
+  }
+}
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