Collection and treatment of wastewater have a huge impact on the environment and economy, both at the local and global levels. Eco-innovation may play a paramount role in the reduction of the environmental impact of such systems, and in their greater sustainability in economic, environmental, and social terms. Decentralization appears as a logical solution to tackle sustainability problems of wastewater management systems, as it focuses on the on-site treatment of wastewater and on local recycling and reuse of resources contained in domestic wastewater (in primus, water itself). This paper analyses the needs, technological options and contribution to water management of decentralized systems. Decentralized solutions in general will tend to be compatible with local water use and reuse requirements, where locally treated water could support agricultural productivity or (in more urban areas) be used as a substitute for drinking-quality supply water for compatible uses. In analyzing sustainability of technology, different dimensions should be taken into account (in particular, local issues). There is no fixed or universal solution to the technological issue; to the contrary, all relevant studies demonstrated there are varying degrees of sustainability in the way a technology is selected and operated, to avoid exporting problems over time or space.