Worldwide water management in irrigated and rain-fed agriculture is becoming more and more complex to overcome the expected water scarcity stress. In addition to this, challenges of global warming and climate change would have to be met through the judicious application of water in agriculture through climate-smart water technologies. Agriculture is an important sector in India and many developing countries, providing huge employment opportunities to rural populations, and supporting them to achieve food and nutritional security goals. In this paper, an attempt has been made to address challenges of increasing food production and improving rural livelihoods, while safeguarding critical water resources for sustainable use through adaptive measures for effective water management, particularly in drought-prone regions. An integrated approach needs to be implemented in agricultural water management through adoption of innovations such as water harvesting, micro-irrigation and resource conservation farming to increase water-use efficiency in agriculture and other critical services to humans and animals. The aim of this study is to facilitate an improved understanding of the potential implications of climate change and adaptation options for agricultural water management and thereby assist policymakers in taking up adaptation challenges and developing measures to reduce the vulnerability of the farming sector to climate change.