Effective river management requires integration of biophysical and human dimensions of the ecosystem, which in turn involves the development of new forms of decision-making processes and institutional frameworks. In New South Wales, institutional changes to river management have been formalized in the Water Management Act 2000. This paper presents the findings of a case study that investigated decision-making processes in the establishment of environmental flow regimes for the Lachlan River in western New South Wales. The study was based on document analysis, observation and interviews with members and support staff of a stakeholder-based river management committee. The findings of the study highlight social capital, adaptive management and consensus decision making as key components in establishing environmental flow regimes as part of a participatory approach to river management.