Abstract: A fuel-fired water heater has a draft inducer fan assembly with a housing having an inlet for receiving hot combustion gases discharged from the water heater, and an outlet for discharging the combustion gases. A normally closed damper member within the housing is openable by fluid pressure force created by operation of a draft inducer fan portion of the assembly. With the damper in its open position the fan exhausts the received combustion gases through a housing outlet. When the damper closes it prevents convective outflow through the housing outlet of flue-heated air. In alternate embodiments of the assembly the fan is operative to also draw in dilution air that cools the fan motor and the discharged combustion gases, with the assembly having an internal configuration preventing convective outflow of flue-heated air through the housing dilution air inlet during standby periods of the water heater.