Water resources potential exhibits an important discrepancy in Northern and Southern Mediterranean countries. The water availability and dependency of countries on external resources have shaped their water policies to a great extent. Although centralized and traditional in many instances, the Mediterranean countries are subject to mutation with regard to their legal framework and institutional structure since the adoption of regional binding documents by the contracting parties (e.g. the Barcelona Convention and its protocols) and regional actions like the Mediterranean Action Plan initiated by the UNEP. Sustainable development objectives enunciated at the Rio Conference have been a driving force for the Mediterranean countries to re-evaluate their environmental policies, of which water management is considered to be the most important component. The legal and institutional framework related to the management of continental freshwater has been analyzed in Mediterranean countries with regard to water rights, the role of the state, institutions, planning, allocation, investment and cost recovery issues. After this analysis, a synthesis highlighting the major shortfalls and the corresponding solutions that the countries envisage in practice is given. This study was initiated and supported by the UNEP/MAP Blue Plan in 2000 and updated in 2005.