Pour the water and coconut milk into a large saucepan.
Whisk the mixture together.
Bring the mixture to a boil, then turn the heat down to a gentle simmer.
Add the sugar and tapioca pearls.
Use a whisk to stir the mixture frequently over low-medium heat.
As the tapioca pearls cook, the mixture will thicken. Keep stirring to prevent the mixture from sticking to the bottom of the pan and burning.
Cook for about 15-20 minutes, or until all of the tapioca pearls turn translucent.
Remove the pan from the heat.