Water governance is a complex, multilevel process based on the socio-political and administrative systems. The sustainable use of water resources is the main challenge of the present-day global water governance. The top-down, technocratic approach to governance made the water crisis, the crisis of governance. Literature shows a radical change towards a more humanistic, situation-based strategy that can solve water issues. The article analyses the significant water challenges, which include governance, scarcity, sustainability and adaptability. The article focuses on the importance of considering good governance principles such as accountability, transparency, responsiveness, effectiveness and efficiency, inclusiveness and equity and citizens’ engagement in water governance, with particular emphasis on the context-based approach. The central argument is that the water governance system differs according to the context of governance, and the application of the good governance principle should follow contextual understanding. A major suggestion is that a context-based, good governance approach can be the sustainable solution to the water crisis.