In order to face the existing challenges in country’s water resources management development and implementations of some approaches using social participations and support of market forces seen necessary. Since water has a major role in sustainable development procedure especially in our country with the rapid increase of demand (population growth and agricultural development) coupled with lowering the level of the resources, following these kinds of approaches has become more significant.This paper considers the establishment and promotion of water markets as one of the principal approaches in managing water resources. Accomplishing these goals involves strengthening government plans for water resources conservation and regulation through market forces as well as supporting regulatory institutions in water markets. In addition, in this paper the requirement of setting up water markets are classified according to structural reforms in water rights and legislation, institutional reforms, and development in the networks of water supplies. Specifying water rights, reconsidering water legislation by making water transaction formal, water banks, and local institutions for resolving disagreements are priority plans for creating these markets. However, government plays an important role in supporting market forces. Regulatory institutions in a water can be useful in achieving water allocation plans and improving patterns of consumption as well. These regulatory institutions, whose principal members are governments, will ensure the management of effluent discharge (agricultural sewage, and urban and industrial waste water), the allocation of basic consumption, and extra usage. Considering that there have been some traditional water markets in Iran for the past years, the government should take an effective action to develop these markets and to make them formal.