The levels of service provided by the Hungarian water and wastewater industry to its customers are below those provided in most of western Europe. The situation in Hungary is typical of much of eastern Europe. A team of Hungarian and western engineers, financial experts and regulatory specialists examined the water and wastewater industry and prepared a restructuring framework to assist in guiding development. Key recommendations for restructuring are that private sector disciplines should be introduced for development and operation of infrastructure; that clear commercial, financial and environmental regulatory measures should be put in place; and that clear priorities should be established for infrastructure development programmes. Hungarian water and wastewater industry professionals were intimately involved in developing the framework and are currently leading its implementation. This work, supported by the British Know How Fund, has direct application to other parts of central and eastern Europe. It demonstrates how a strong international partnership can facilitate water and wastewater industry development.