With the launch of the UN International Decade for Water on 22 March 2005, awareness is raised in the international community of the growing demand and scarcity of water for people throughout the world. Water is a particularly scarce resource in both Israel and the Palestinian Territories. The use of the water resources of the West Bank and Gaza has been part and parcel of the Israeli–Palestinian peace negotiations. With the beginning of new peace negotiations under Palestinian President Mahmud Abbas, the topic of water and its allocation to Palestinians and Israelis is back on the negotiation table. The present article will point to the water crisis in Israel and the Palestinian Territories and analyse core provisions of international law which govern the use of water resources. Finally, it will outline how an allocation of water rights according to principles of international law could take place.