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Direct groundwater regulation (e.g. registration of abstraction points, permits and concessions) has been much advocated world-wide; however, few successful cases have been reported. The development of groundwater use in Minqin County, Gansu Province, China, is described, with analyses of the situation before and after the implementation of direct groundwater regulation measures in 2007. Based on a survey carried out in 2010, it is argued that the regulation measures, which were part of a broader water-policy reform, were successfully implemented due to their integration with pre-existing collective groundwater institutions. In addition to the regulation measures-the closure of wells and per capita water use restriction-all villages had to form water users’ associations (WUAs) which were assigned to implement the new regulations. These WUAs were found to have the same structure as the existing collective groundwater institutions. Through the water-policy reform, the function of the pre-existing groundwater institutions was transformed from managing "water exploitation" to managing "water conservation".