Lack of wastewater treatment is among the main water problems worldwide. The implementation of wastewater treatment policies faces varying challenges given the many different contexts. Therefore, context-sensitive approaches are required from a governance perspective. This paper aims to improve the understanding of the role of contextual factors in water and wastewater governance drawing on empirical evidence from Latin America, with a focus on the Guadalupe River Basin in Mexico. The findings indicate that the governance context restricts the implementation of wastewater treatment policy. Thus, future reforms should consider the top-down nature of the policy implementation process.