Reliable access to clean water remains one of the key global challenges of our time. Over 10 per cent of the world’s population do not have access to clean drinking water, a figure which doubles when applied only to rural areas, more than 20 years after the end of the International Decade for Drinking Water Supply and Sanitation. This paper builds on theoretical literature examining the failure of traditional approaches to development intervention in the water sector and the potential for use of an alternative approach. This paper applies a mixed methods approach to the Making Markets Work for the Poor (M4P) diagnostic process in examining systemic constraints facing the water sector in Bugiri and Namayingo Districts of south-east Uganda. The results of a household survey, in-depth interviews, and secondary data analysis help to explain why previous models’ interventions in these areas have failed to deliver sustainable service provision. It then uses these findings to develop a model that has the potential to address constraints in such a way as to deliver lasting improvements in high-quality water services delivery. The data presented aims to add empirical weight to the theoretical case for adopting analysis-based, context-specific models of intervention, with development actors working through partners to facilitate change, rather than actively participating in a system.