This article examines the implications of urbanization for intersectoral competition over water, not only in technical or economic terms, but also in terms of political and social dynamics as well as the possibilities to meet the water needs of growing cities. It begins by looking at the water needs of each sector in urban and rural areas—the quantity, timing, and quality of water demand. The article identifies promising technical and institutional options for supply and demand management to provide adequate water services. It concludes by exploring the implications contemporary urban dynamics pose for future water policy.