Increasing population, economic growth, climate change and moving to more development led to water scarcity especially in arid and semi-arid regions that the inefficient governance intensified these challenges in river basin. Water governance refers to a range of political, social and economic systems to developing and managing water resources in different levels of society. The aim of this study is to assessing the sustainability of water governance functions in Zayandeh-rood river basin based on institutional analysis development and governance transformation frameworks. Data were collected via comprehensive structured questionnaire through face-to-face interviews with 31 water experts and managers in Isfahan and Chaharmahal and Bakhtiari provinces and central administrator. The validity and reliability of the questionnaire was initially evaluated respectively by using expert’s judgment and Cronbach’s alpha coefficient. Furthermore, the priority of sustainability principles was appraised by analytic hierarchy process (AHP) method. The results show that the performance of governance in this basin is unsustainable. Furthermore, government has been emphasized on creating livelihood opportunity and security of society by development of no water-wise cultivation and industrials that led to imbalance situation between available water resources and demands. The most important river basin agenda for improving water governance function is to enhancing national, regional and local coordination and water shortage adaptation and mitigation. Transition to fit for purpose water governance would have required identifying obstacles and problems of stakeholder involvement and participation for resoluting inter-regional and intra-regional conflicts. In addition, it is necessary to combining hard and soft policy for coping with water scarcity, facilitating institutional reform for strengthening the existing informal institutions and two-way interaction between macro policies and water sector. Keywords : water governance performance, sustainability, integrated management, Institutional analysis, Zayandeh-rood Basin.