Water management issues at the scale of whole river basins are becoming significant public concerns in China. Adverse aspects of basin-wide mismanagement of water resources in China are reviewed and analysed with respect to watershed management organizations, systems and policies, legislation and implementation of law, public participation, and other pertinent fields. Several critical issues in watershed management should be addressed in the immediate future, including divided jurisdiction and overlapping responsibilities of water management agencies, water pricing, lack of attention to non-point sources, absence of legislation regarding both watershed organizations and public participation, and illegal implementation of existing environmental laws and national policies concerning agriculture and farmers. Based on those analyses and worldwide practices, conceptual frameworks for integrated watershed management in China, including organization, legislation and institutions, are put forward both for the short and the long term. As a national focus, the Three Gorges Project is expected to have potentially disastrous environmental impacts. Mismanagement in the Three Gorges watershed is indicated, including piecemeal approaches to management, absence of legislation and a watershed approach that is disintegrated by administrative boundaries.