Over recent decades co-management has become an increasingly popular form of governance reform in many developing countries. Viewed as a means of promoting sustainable and equitable management of natural resources, it has seen wide application in small-scale inland fisheries. However, perhaps because of its worthy credentials, there has been insufficient critical assessment of the results. This paper commences with a review of underlying theory which is then used to explore the reasons for failure of a co-management initiative in Sri Lankan reservoir fisheries between 2001 and 2002.