There is growing consensus in the global water community that the concept of Integrated Water Resources Management (IWRM) is only the starting point in the IWRM implementation process. This paper proposes that special attention should be drawn to well-elaborated and adapted Capacity Development (CD). It is argued that measures for solving existing water problems can only be sustainable and effective, if the knowledge generated about possible solutions is deeply rooted within the originating region. General guidelines for CD and knowledge transfer are elaborated, and these constitute the basis for region-specific CD strategies as exemplified in the Ukrainian Western Bug River Basin, one of five model regions within the International Water Research Alliance Saxony (IWAS). As a first step towards improving river basin management, situation analysis and capacity assessment are undertaken to evaluate social and political circumstances, identify relevant stakeholders, existing competencies, and anticipated difficulties in establishing an operational IWRM and appropriate tailor-made measures are proposed. The experiences gained during this process indicate that neither IWRM nor CD can be expected to stand alone when considering sustainable development in water resources management.