Collective action has inevitable importance for sustainable governance of shared resource systems with interactions across multiple social and spatial scales. Village irrigation tanks in Sri Lanka have been recognized as shared resource systems sustainably managed through the collective action of local communities throughout history. Increased population pressure on shared resources and expanded socio-economic relationships over time have led to extended resource-based interactions between people. This occurred beyond village tanks within the broader scale of Village-Tank-Cascade Systems (VTCS), in which village tanks are constituent sub-units. This demands the cross-scale collective action of local communities for sustainable governance of VTCS, which has become a challenging endeavor in the current context. This case study explores the dynamics of collective action across multiple social and spatial scales within a VTCS by identifying existing collective action arenas, drivers, and limitations for the local community to engage in collective action through a mixed-methods approach with reference to the Medde Rambewa cascade system in the dry zone of Sri Lanka. Findings reveal that collective action arenas of VTCS-based local communities occur in response to common challenges posed by disturbed environmental equilibria and as a part of people’s lifestyle, with outcomes contributing to climate change adaptation, livelihood support, risk or emergency preparedness, and promoting social identity. Economic incentives, rules, and fines imposed by Farmers’ Organizations (FOs) were found to be drivers of currently adopted collective activities at the scale of village tanks. While collective action prevails beyond the scale of individual village tanks when governed by community institutions, shared resource uses, and social relationships among actors, individualistic resource uses occur in the absence of legitimate regulatory mechanisms. The study highlights the need for legitimate, scale-sensitive solutions to long-overdue common problems experienced by VTCS-based communities in order to foster meaningful collective action on a broader scale.