This study critically examines the dominant paradigms within Iran’s water resources legal system by utilizing the philosophical-political foundations of ‘eco-socialism’ to elucidate the fundamental contradictions between current approaches and the prerequisites for socio-ecological sustainability. The research methodology of this study utilizes qualitative content analysis and critical discourse analysis of legal and policy documents related to water resources management. The results demonstrate that water governance in Iran stands in structural contradiction with eco-socialist principles. This contradiction is manifested across three primary axes: 1) Institutional centralization, 2) the marginalization of local communities, and 3) the commodification of water resources. Within this context, the primacy of financial logic—prioritizing return on investment over ecological and social imperatives—has transformed the concept of ‘watershed delineation’ from a conservationist framework into an instrument of structural bias favoring macro-production. Consequently, resolving the water crisis in Iran necessitates a transition from structural-administrative management to polycentric and participatory governance at the watershed scale. This proposed paradigm is anchored in the following principles: 1) Redefining allocation priorities by granting absolute precedence to ecological water rights and small-scale agricultural livelihoods; 2) Reforming the restrictive pricing structure while establishing a transparent accounting system; 3) Restoring collective ownership to local multi-stakeholder councils; and 4) Integrating indigenous knowledge with modern scientific tools. This legal-political reinvention aims to transform water resource management into a platform for achieving participatory democracy and distributive justice, through the reform of macro-level regulations, the systematic engagement of local stakeholders, and structural decentralization from the Ministry of Energy in favor of local and polycentric water governance.