The objective of this study is to trace the historical evolution of the present Nile Basin regulatory framework and examine its influence on the current interactions among Nile riparian states. This research adopts a case-study design, with in-depth qualitative analysis of the Nile Basin as an example of the complex transboundary relations over shared waters. It uses an analytical framework derived from the New Institutional Economics (NIE) to analyse the evolution of the institutional framework that has governed the Nile basin and how it affected the annual water share allocated to each riparian country. The study argues that the historical beliefs and social norms of the riparian societies have been among the major factors that influenced the cooperation attempts during the past century and determined their outcomes. Therefore, a prerequisite to develop sustainable cooperation is levelling the playing field by addressing the beliefs and norms that have prevented cooperation while identifying the beliefs that can support cooperation.