In Mexico, water planning is based on the National Water Law, the core of which is Integrated Water Resources Management (IWRM). The municipality provides wastewater treatment and reuse, and an integrated approach is mandatory for these processes. However, a traditional (non-integrated) management regime has prevailed in water legislation, resulting in pollution and the inefficient use of water. The objectives of this research were to analyze the Mexican legal framework and international guidelines in the use of reclaimed water for agricultural irrigation and environmental discharges, and to evaluate challenges facing reclaimed water in the Maneadero Valley, Baja California, as a case study. Results show that wastewater reuse was implemented in the absence of integrative planning and assessment of the potential impacts on the environment and public health. In addition, gaps between decisions linked to the legal attributes of the relevant institutions were identified. Defined roles across the three levels of authority, transparent and congruent funding, coherent water-quality requirements and the strengthening of stakeholder participation are needed to adopt integrated water resource management for reclaimed water use. The alignment of common goals on public health, environmental protection and agricultural development between authorities and the different sectors is crucial to bridge these challenges.