The challenges pertaining to water governance of the Mahanadi River between the state governments of Odisha and Chhattisgarh date back to more than 8 years ago. This is a clear example of the intricate and politicized nature of interstate water conflicts in the nation. Rooted in the privatization and diversion of water for industrial purposes, the dispute has exacerbated water scarcity in Odisha, particularly affecting its agriculture and drinking water supply. Political maneuvering has further complicated resolution efforts. Thus, this paper examines the historical context, political and industrial influences, and socioenvironmental impacts of the dispute. It proposes a framework for resolving the conflict, emphasizing the need for cooperative federalism, equitable water allocation, and sustainable water governance within constitutional and ecological contexts. The Mahanadi River holds great importance to the farmers and industries in Odisha and Chhattisgarh. Tensions between the two states arose when Chhattisgarh initiated plans to construct barrages along the river. Chhattisgarh’s rationale for the barrages was to prevent excess floodwater from flowing unused into the sea without disrupting the natural flow of the river. However, the Odisha government strongly opposed the construction of these dams and barrages, citing the welfare of farmers in the state as a primary concern. While both governments claim that their actions are in the interest of farmers and agriculture, in reality, industries in both states consume the majority of their water resources.