This study examines how community level water governance works in rural areas in Uganda where the majority of the poor people live. Using an analytical framework that describes the processes involved in the Community Based Maintenance System, the study establishes the relationship between concepts of participation, capacity, and how they influence pro-poor water outcomes within a broader decentralised system of local governance. Using primary data generated from two sub-counties in Mbarara district, the study establishes that water policies in place have little bearing on the practices communities have in place to govern water and sanitation facilities because of the social aspects and political processes at the local level. It concludes by highlighting the fact that favourable outcomes especially for the poor in the water supply and sanitation sector have to continuously be negotiated because of the prevailing local conditions that do not guarantee straightforward solutions to practical governance problems.