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Water scarcity is among the contemporary problems of our time across the globe. The problem is worsened by policy failures to enforce water governance and watershed conservation. Consequently, it has curtailed the capacity of watersheds to release hydrological services, water in particular. We carried out this study to explore approaches for watershed conservation and investigate water governance challenges in Pangani River Basin, Tanzania. We collected data by using structured questionnaires and meetings with different actors in the study area. We found that retaining riparian vegetation is the appropriate strategy for watershed conservation and sustainable water flow. Water governance challenges include ineffective and uncoordinated water governing institutional structures; and untrustworthy financial management. We feel that building the capacity of water users association could bring about positive outcomes for both watershed conservation and water governance. We recommend that strategies and policies aimed at improving the flow of hydrological services should also focus on improving the welfare of the local communities, who are the primary beneficiaries of water from watersheds.