Integrated Water Resources Management (IWRM) has been a dominant paradigm for water sector reform worldwide over the past two decades. Ethiopia, among early adopters, has developed a water policy, legislations, and strategy per IWRM core principles. However, considerable constraints are still in its way of realization. This paper investigates the central challenges facing IWRM implementation in the Awash Basin analyzing the discrepancy between IWRM principles, the approach followed in Ethiopia and its practice in the Awash Basin. A decade and a half since its adoption, the Ethiopian IWRM still lacks a well-organized and robust legal system for implementation. Unclear and overlapping institutional competencies as well as a low level of stakeholders’ awareness on policy contents and specific mandates of implementing institutions have prevented the Basin Authority from fully exercising its role as the prime institute for basin level water management. As a result, coordination between stakeholders, a central element of the IWRM concept, is lacking. Insufficient management instruments and planning tools for the operational function of IWRM are also among the major hurdles in the process. This calls for rethinking and action on key elements of the IWRM approach to tackle the implementation challenges.