The spectrum of the Class 0 source L1448-mm has been measured over the wavelength range extending from 6 to 190 μm with the Long Wavelength Spectrometer (LWS) and the Short Wavelength Spectrometer (SWS) on the Infrared Space Observatory (ISO). The far infrared spectrum is dominated by strong emission from gaseous H2O and from CO transitions with rotational quantum numbers J ≥ 14; in addition, the H2 pure rotational lines S(3), S(4) and S(5), the OH fundamental line at 119 μm, as well as emission from [O I]63 μm and [C II] 158 μm are also observed. The strong CO and water emission can be consistently explained as originating in a warm gas component at T ~ 700-1400 K and nH2~(3-50) 104cm-3 , which fills about 0.2-2% of the ~ 75" LWS field of view (corresponding, assuming a single emitting region, to a physical size of about (3-12)" or (0.5-2) 10-2 pc at d = 300 pc). We derive an H2O/CO abundance ratio ~ 5, which, assuming a standard CO/H2 abundance of 10-4, corresponds to H2O/H2 ~ 5 10-4. This value implies that water is enhanced by about a factor ~ 103 with respect to its expected abundance in the ambient gas. This is consistent with models of warm shocked regions which predict that most of the free atomic oxygen will be rapidly converted into water once the temperature of the post-shocked gas exceeds ~ 300 K. The relatively high density and compact size inferred for this emission may suggest an origin in the shocked region along the molecular jet traced by SiO and EHV CO millimeter line emission. Further support is given by the fact that the observed enhancement in H2O can be explained by shock conditions similar to those expected to produce the abundant SiO observed in the region. L1448-mm shows the largest water abundance so far observed by ISO amongst young sources displaying outflow activity; we argue that the occurrence of multiple shocks over a relatively short interval of time, like that evidenced in the surroundings of L1448-mm, could have contributed to enrich the molecular jet with a high H2O column density