The aim of this paper is to analyse the opportunities and limits of water markets in the context of Italian irrigated agriculture, taking into account the changing policy and market framework. The opportunities derive from the theoretical ability of markets to improve the efficiency in the use of water and to contribute to increase agricultural incomes. Doubts about their feasibility are connected to the need of innovative institutions able to manage water transactions, to the occurrence of externalities and to the effects on third parties. The few empirical data about water exchanges between farms show anyway the potential interest for the adoption of such mechanisms at least by some irrigated areas.