This paper examines the extent of water subsidies in Malaysia. This is undertaken within the broad context of the general state of water services in Malaysia. The paper begins a discussion of the historical context of water and development in Malaysia in Section 2. This is followed by a review of the present state of water supply and consumption in the country in Section 3. Section 4 examines water institutions in Malaysia. Water tariff is the focus of discussion in Section 5. The impact of water tariff is discussed in Section 6. Section 7 concludes