Mexico's water management institutions are undergoing a gradual but dramatic change that corresponds to other changes in Mexican society. Implementing these changes has led to the creation of new institutions, including river basin councils, state water commissions, aquifer management committees, and water user associations. Established institutions such as the National Water Commission have accepted new roles. Some of these changes can be considered to be superficial, but this institutional change is impressive. Successful practices can be identified. These include the transfer of the management of large irrigation districts to the users, the periodic practice of establishing a national water plan, the cautious approach to private sector participation in water supply and sanitation, and the national registry of water use. Remaining challenges include weak river basin and aquifer management organizations, overexploitation of key aquifers, polluted surface water, and the inability of water markets to facilitate intersectoral water transfers.