Indus is a river system that sustains communities in both countries India and Pakistan, which have extensively dammed the Indus River for irrigation of their crops and hydro-electricity systems. The river tributaries are Jhelum and Chenab rivers, which primarily flow into Pakistan while other branches—the Ravi, Beas, and Sutlej—irrigate northern India. Conflict in the basin started in 1947 when India stopped water flowing through its canals to Pakistan, forcing the later to approach international agencies for help. Indus Waters Treaty (IWT) was signed by both countries in 1960, giving exclusive rights over the three western rivers of the Indus river system (Jhelum, Chenab and Indus) to Pakistan, and over the three eastern rivers (Sutlej, Ravi and Beas) to India. Competing water demands and inadequate water availability for irrigation and other uses stress regional economy which leads to failing of legal and governance institutions. Water dispute in Indus River Basin (IRB) arose due to poor governance and lack of proper institutions to manage water between two stakeholders, which stressed the amount of water available in the basin. Changing climate worldwide and its effect on mountain snow-caps and glaciers have been exerting new set of challenges to the governance and institutions managing the waters of IRB. Based on the review of secondary literature and scenario analysis, this article exposes the inherent uncertainties and suggests governance solutions.