This article presents the characteristics and performance of an innovative dual source heat pump (DSHP) for heating, cooling and domestic hot water (DHW) production. The research work was carried out in the framework of the H2020 European project: Geot€ch ‘GEOthermal Technology for economic Cooling and Heating’. The DSHP is able to choose the most favourable source/sink in such a way that it can work as an air-to-water heat pump using the air as a source/sink, or as a brine-to-water heat pump coupled to the ground. The DSHP is manufactured as an outdoor ‘plug & play’ unit, working with R32 refrigerant and including a variable speed compressor, which gives full capabilities for an efficient modulating operation. The DSHP was fully characterized in steady state conditions at the IUIIE laboratory. In order to assess its dynamic performance and to identify key control strategies to optimize its annual operation, a complete integrated model of the DSHP system in TRNSYS including the DSHP and all the other system components was developed. A first energy assessment, carried out for an office building located in the Netherlands, proves that the DSHP system would be able to reach a similar efficiency than a pure ground source heat pump (GSHP) system with half the ground source heat exchanger area needed. Therefore, the DSHP system could become a cost-effective alternative solution for heating, cooling and DHW production in buildings, as the initial investment would be significantly reduced compared to GSHPs, with similar or even higher energy efficiency.