Diffuse nonpoint source (NPS) pollutants, such as sediment, nitrogen, phosphorus, and pathogens, have become the primary cause of water quality impairments in the United States of America. Resource management agencies in the USA are expanding the use of tools for the assessment of ecosystem function in water quality programs to control NPS pollution to meet US Clean Water Act objectives. Assessing the ecosystem function of upland and riparian areas provides the context for monitoring data that can improve the targeting of best management practices for NPS pollution, and be a leading (early) indicator for more timely decisions about aquatic habitat and water quality. Assessment of watershed function can be applied to prioritizing resources, developing indicators, monitoring aquatic habitat and water quality, and implementing adaptive management plans to restore degraded ecosystems that are producing NPS pollution. This paper presents three examples of progress in the institutionalization of this approach to water quality programs for sustainable and healthy watersheds that affect federal, state, tribal, and private landowners. Future work should refine the approach by evaluating the benefits, costs, and effectiveness of the use of watershed function in water quality programs.