Environmental & Socio-economic Studies, 2018; 6 (4): 1-10Sustainability of water projects is increasingly becoming an area of concern for researchers and development practitioners given the increased scarcity of water resources and the continued failure of many water projects in developing countries. The cited unsustainability of water projects indicates the lack of strong local institutions that would create an enabling environment. The argument put forward by this paper is that, for water resource projects to be sustainable there must be a well embedded local institution to facilitate effective supervision and management. This study was conducted in three villages of Iringa District to establish the role played by local institutions in creating an enabling environment for water project sustainability. The establishment of the roles played by various institutions was done through institutional mapping and focussed on the types and roles of each institution in ensuring sustainability of water projects. The findings show that the present institutional framework for the management of water supply and sanitation services in the study area is complex and has overlapping roles coupled with inadequate coordination and communication mechanisms. The binary regression model reveals that institutional related factors namely, project maintenance per annum and meetings conducted per annum, to be leading factors for sustainability. The study concludes that the coordination of various institutions is an important aspect for the sustainability of water projects. Therefore, local governments, donors and communities should make sure that technical aspects and regular follow-ups, as well as capacity building among members of the community and water user associations become an integral part of any water project for the realisation of sustainability.