This report outlines an approach to the design of irrigation institutions that is useful to officials in donor agencies, host governments, and other organizations involved in designing irrigation projects in developing countries. The crafting of irrigation institutions is an ongoing process that must directly involve the users and suppliers of irrigation water throughout the design process. Instead of designing a single blueprint for water user organizations, to be adopted on all irrigation systems within a jurisdiction, officials need to enhance the capability of suppliers and users to design their own institutions. Following an introduction, Chapter 2 of the report focuses on the significance of viewing institutions as "rules-in-use" rather than as paper organizations created by formal legislation without participation by those affected. Chapter 3 discusses the process of crafting institutions. Chapter 4 presents design principles derived from an intensive study of several long-enduring self- organized irrigation systems. Finally Chapter 5 focuses on the problems of applying these design criteria in efforts to improve both government-owned and farmer-owned irrigation systems.