Adaptive governance is an emergent phenomenon resulting from the interaction of locally driven collaborative efforts with a hierarchy of governmental regulation and management and is thought to be capable of navigating social−ecological change as society responds to the effects of climate change. The assertion of Native American water rights on highly developed water systems in North America has triggered governance innovations that resemble certain aspects of adaptive governance, and have emerged to accommodate the need for Indigenous water development and restoration of cultural and ecological resources. Similar innovations are observed in the assertion of Indigenous voices in Australia. This presents an opportunity to analyze the emergence of adaptive processes within complex legal systems. We explore the role of law in locally driven innovation in this context, concluding that any system of governance that requires greater flexibility will only be viewed as legitimate, and thus succeed, if attention is given not only to adaptive capacity, but also to aspects of good governance. Through examples of the assertion of Indigenous rights, we illustrate critical links between adaptive capacity in water management, good governance, and law.