Iran is an arid and semiarid country with scarce and sensitive water resources. The increasing demand for water has caused an alarming decrease in annual per capita renewable water resources, currently estimated to be about 2,000 m(3) for a population of around 65 million. With the current trend in population growth, the per capita water available is predicted to decrease to less than 1,000 m3 by the year 2025, which will put Iran in the category of countries with chronic water scarcity. As available water resources are unevenly distributed in terms of both time and space, water resources in many areas are already under pressure. Over the past two decades, much effort has been expended and great strides have been made in the development and exploitation of water resources for various uses. Primarily these efforts have been aimed at maximizing water supply to meet increasing demands. At the same time, enough attention has not been paid to integrating other approaches in which emphasis is placed on managing demand and saving water through sound water consumption practices. The uneven distribution of water across the country, on the one hand, and the expansion of population centers as well as developments in agricultural and industrial activities, on the other, has led to the present shortage of water for urban and domestic uses. Acting upon a traditional approach to water management, water managers at both local and national levels find water transfer from humid zones to arid zones to be the only option to satisfy demand. Each year proposals are presented to the government for new interbasin water transfer (IBWT) projects, which are normally backed by political pressure. These efforts occur even while efficient and effective use is not being made of the available water resources. In addition, water consumption in the urban, agricultural, and industrial sectors is not satisfactory. Although the water transfer projects have helped to reduce the intensity of water shortage in the receiving areas, a holistic and integrated approach has not been observed in planning for these projects. Recent years have witnessed a renewed emphasis on integrated management of water resources, on the basis of which a new comprehensive water act and water management system is being developed. Increased awareness among water managers of the advantages of integrated water resource management and increased concerns about the possible adverse effects of IBWT projects have led to more careful examination and more in-depth study of new proposals. This paper will present the current water resources situation and the trend in water consumption in Iran, and outline the new policies and strategies adopted by the water sector. It will also review and discuss information on several large interbasin water transfer projects, some implemented and some proposed for implementation. The paper will conclude with results and recommendations.