Hong Kong produces over two million tonnes of municipal wastewater each day. Until recently, 50% of the wastewater volume entered water courses, rivers and coastal waters without treatment. Untreated organics, heavy metals and refractory synthetic materials accumulate in certain areas, and have led to breakdown of aquatic and marine ecological systems, closure of beaches, red tides and bioaccumulation in seafood. In 1986, a flexible framework of environmental management master plan was designed, to be implemented over the following two decades. The master plan comprises (1) establishment of water control zones and pollution control legislation, (2) upgrading of services and facilities for management of municipal sewage and chemical wastes, (3) construction of the “Strategic Sewage Disposal Scheme”, and (4) implementation of a “polluter pays policy”. This paper critically reviews the legislation and management priorities relevant to the water environment.