Water access, demand, usage and management become complex due to the crossing of multiple boundaries: political, social and jurisdictional, as well as physical, ecological and biogeochemical. This paper focuses on a particular class of complex water problems: the allocation of transboundary water (TBW) among competing riparians with conflicting needs. The complexity in TBW allocation lies in the dynamic consequences of competition that arise from the interconnections and feedbacks among actors, processes and institutions operating in the knowledge and political communities. Consequently, many TBW allocation issues become contingent upon the dynamic changes that occur within the knowledge and political communities as well as the interactions and feedback occurring between these two communities. In addition to understanding and addressing the contingent contextual factors that span the knowledge and political communities, resolving complex TBW problems also needs to be guided by contextual application of two global principles – equity and sustainability – as anchors to accommodate the values and interests of the stakeholders involved in a TBW problem. This paper examines the process that led to the relatively successful resolution of conflict over allocating the waters in the Indus basin between India and Pakistan. Using the Indus water treaty as an illustrative case, the paper identifies three enabling conditions that underlie the effectiveness of negotiating a treaty and its continuous efficacy in addressing TBW problems. The paper argues that effective resolution of complex TBW problems is rooted in the nature of the negotiation process, the provisions in the negotiated agreement and the establishment of institutional means to solve emergent problems that are related to the original agreement.