The pursuit of more integrated water resource management based on hydrological boundaries (i.e. river basins) poses significant challenges for domestic environmental governance, let alone in situations where rivers transcend national borders. This paper examines which conditions of governance (and beyond) favour cooperative transboundary river basin management practices under the European Water Framework Directive. This directive, with its detailed procedural provisions for (international) river basin management planning, offers an excellent test bed to investigate and assess the factors and mechanisms of transboundary river basin management. Postulates of neo‐liberal theory of international cooperation, drawn from international relations, help to identify relevant conditions for analysis, covering the two dimensions of state interests and transaction costs. Results of a qualitative comparative analysis show that transaction costs have a strong mitigating influence on the occurrence of cooperative river basin planning. However, reduced transaction costs alone do not suffice for states to enter into cooperation, but the latter have to be activated by a favourable incentive structure, i.e. high problem pressure or legal or domestic incentives. While these insights hold for most cooperative river basin districts, a few basins that follow a contradictory pattern without reduced transaction costs deserve further attention. The findings shed further light on the influence of contextual factors in shaping water governance. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment