In a large saucepan, saute onion in butter until tender. Stir in the cabbage, salt and pepper. Reduce heat; cover and simmer for 10 minutes. Stir in apples and water; cover and simmer 45 minutes longer or until cabbage and apples are tender.
Combine vinegar and brown sugar; stir into cabbage mixture. Bring to a boil. Reduce heat; simmer, uncovered, for 15 minutes or until cabbage and apples are glazed.