The pursuit ofmore integrated water resourcemanagement based on hydrological boundaries (i.e. river basins) poses significant challenges for domestic environmental governance, let alone in situations where rivers transcend national borders. This paper examines which conditions of governance (and beyond) favour cooperative transboundary river basinmanagement practices under the EuropeanWater Framework Directive. This directive, with its detailed procedural pro- visions for (international) river basin management planning, offers an excellent test bed to in- vestigate and assess the factors and mechanismsoftransboundary riverbasinmanagement. Postulates of neo-liberal theory of international cooperation, drawn frominternational relations, help to identify relevant conditions for analysis, covering the two dimensions of state interests and transaction costs. Results of a qualitative comparative analysis show that transaction costs have a strong mitigating influence on the occurrence of cooperative river basin planning. However, reduced transaction costs alone do not suffice for states to enter into cooperation, but the latter have to be activated by a favourable incentive structure, i.e. high problem pressure or legal or domestic incentives. While these insights hold for most cooperative river basin dis- tricts, a fewbasins that followa contradictory patternwithout reduced transaction costs deserve further attention. The findings shed further light on the influence of contextual factors in shaping water governance.