The world will experience an estimated 40% freshwater supply shortage by 2030, converting water scarcity into one of the principal global challenges that modern society face. Urban water-reuse is recognized as a promising and necessary measure to alleviate the growing water stress in many regions. The transformation to widespread application of water-reuse systems requires major changes in the way water is governed, and countries such as Spain already find themselves involved in this process. Through the systematic assessment of the city of Sabadell (Spain), we aim to identify the main barriers, opportunities and transferable lessons that can enhance governance capacity to implement systems for non-potable reuse of treated wastewater in cities. It was found that continuous learning, the availability and quality of information and level of knowledge and strong agents of change are the main capacity-building priorities. On the other hand, awareness, multilevel network potential and implementing capacity are already well-established. It is concluded that in order to undertake a widespread application of water-reuse practices, criteria examining water quality according to its use need to be developed, independently of the water’s origin. The development and implementation of such a legislative frame should be based on the experience of local water-reuse practices and continuous evaluation. Finally, the need for public engagement and adequate pricing mechanisms are emphasized.