Despite embracing integrated water resources management (IWRM), Tanzania faces water scarcity, degradation, and climate impacts because of weak implementation driven by poor stakeholder participation and inadequate institutional capacities. This mixed‐methods study aimed to analyze opportunities for advancing IWRM through participation and capacity‐building interventions. Quantitative data were obtained through questionnaires to measure capacity needs and engagement levels, with 78 representatives from important stakeholders in the Arusha, Tanga, and Morogoro regions participating. Qualitative data involved interviews and document review. Data were analyzed statistically and thematically. Stakeholders recognized IWRM's importance, but participation was limited to implementation, with the government dominating decision making. Key capacity gaps identified included hydrological monitoring (65%), legislation enforcement (60%), and financial management (52%). Enhancing multi‐stakeholder collaborative frameworks, establishing independent platforms for joint planning, and regular needs‐based training were recommended to strengthen fragmented roles, address knowledge gaps, and empower stakeholders.