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The micro-watershed level can be a promising unit for the integration and coordination of water management functions that affect sustainable water use and livelihoods of local communities such as farmer groups. Recent projects in the state of Rio de Janeiro in Brazil have advocated interventions at this level. However, micro-watersheds are still not adequately incorporated in the multi-level governance systems of water and related ecosystems in Brazil. Further, a complex landscape of non-local actors and higher-level policies interact and determine resource use patterns at the micro-watershed level. This paper maps stakeholders and shows their influence areas on key water issues using the example of micro-watersheds in Rio de Janeiro. It also highlights the key challenges arising from the governance practice and the institutional framework related to micro-watersheds.