Watershed development is increasingly seen as the lynchpin of rural development in dryland areas – one that integrates sectors and provides the foundation for subsequent development. With this premise, the government is apparently committing larger resources for watershed development and plans to bring most of the dryland, degraded lands under the coverage of the programme over the next 25 years or so. Though some of the notable examples of watershed development appear to offer a way out of stagnation and degradation for all those areas that development had seemingly bypassed, various reviews and studies show that, when averaged across all programmes, the performance has not kept pace with the expectations. Reviewing these studies, the authors contend that the programme needs to be restructured significantly, if the watershed development approach has to deliver what it promises. Such a restructuring must clearly embrace a normative framework that treats livelihoods, productivity, sustainability, equity and decentralised governance as its central concerns, and must be based on strategies that respond to the varying socio-ecological contexts and past experiences with implementation.