In Australia's Murray-Darling Basin the Australian and state governments are attempting to introduce a system of water management that will halt ongoing decline in environmental conditions and resource security and provide a robust foundation for managing climate change. This parallels similar efforts being undertaken in regions such as southern Africa, the southern United States, and Spain. Central to the project is the Australian government's Water Act 2007, which requires the preparation of a comprehensive basin plan expected to be finalized in 2011. This paper places recent and expected developments occurring as part of this process in their historical context and examines factors that could affect implementation. Significant challenges to the success of the basin plan include human resource constraints, legislative tensions within the Australian federal system, difficulties in coordinating the network of water-related agencies in the six jurisdictions with responsibilities in the Murray-Darling Basin, and social, economic, and environmental limitations that restrict policy implementation.