South Tarawa is a town on an isolated Pacific atoll of approximately 46,000 people, with absolute water scarcity, poor water safety and consequently water-related problems. It relies on shallow groundwater, with contributions from rainwater tanks and desalination. Due to a combination of factors such as small scale, limited human resources, system complexity, isolation and lack of financial resources, water management capacity is inadequate. Sustainability of groundwater resources is also uncertain and there are indications that groundwater has been extracted above the sustainable pumping rates. Social complexity is highlighted by the resistance from traditional landowners to the attempts to deal with the supply-side deficit through establishment of new infiltration galleries. In this paper, issues relating to water management in South Tarawa are reviewed. This follows on to an exploration of possible strategies to improve the existing situation. This research forms an empirical building block in the foundation of a larger study, aiming at developing a framework for strategic and adaptive small town water management. In particular, the larger study explores the options and viability of co-management of water and land resources in small scale urban areas as an alternative to traditional urban management approaches.