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Despite major reforms in water management, many water resources are still over-exploited and under threat. Hard questions are accordingly being asked as to whether present legal and governance tools are providing adequate answers to Australia's pressing water problems. Of particular concern is the need to improve community engagement in water law and governance. Responding to these concerns, this article draws on 68 interviews and a survey of community and government stakeholders involved in three different collaborative decision-making processes designed to manage diffuse pollution of local streams, dry land salinity and nutrient/sediment runoff, and groundwater overuse. The article explores and critically examines the internal dynamics of the decision-making processes, and provides a range of insights for policy and theory for designing meaningful and effective collaborative decision-making in the practice of governing water resources. The article also considers the implications of these collaborative approaches for our understanding of the modern regulatory state.