The sustainability of rural water supply services (WSS) remains one of the core challenges of the rural water sector in Nicaragua. The data available through the Central American Rural Water and Sanitation Information System in Nicaragua (SIASAR, in Spanish) is utilized to investigate the factors that drive the sustained functionality and quality of rural WSS systems over time. This report uses data from 6,863 communities, 4,792 water systems, 2,585 service providers, and 154 technical assistance (TA) providers contained in the SIASAR dataset. Statistical and econometric analysis provide evidence to support the hypothesis – widespread among rural WSS practitioners – that ‘soft’ measures in the provision of WSS are effective in fostering sustainability or ‘functionality’ of those systems. Such ‘soft’ measures include management capacity building of WSS community boards in charge of WSS oversight; demand-responsive approaches for developing, operating, managing, maintaining, rural water infrastructure; cost recovery mechanisms; community participation in the management of WSS systems; and the sustained provision of post-construction TA by local authorities. These measures are found as important determinants of the sustainability of WSS and its investments, and therefore are recommended to be included and institutionalized in rural WSS sector development policies.