Triggered by climate change, local freshwater scarcity and rising public awareness towards ecological issues, environmental aspects are becoming key decision criteria for planning of urban water management infrastructure. Simultaneously, the implementation of measures according to the EU Water Framework Directive requires huge investments in the coming years for both upgrading of existing infrastructure and the construction of sewer networks or treatment plants. Among existing tools for environmental impact assessment, LCA offers the most accepted and comprehensive method to support decision makers with information on the environmental profile of new investments or upgrading of existing infrastructure. This paper describes on-going case studies using LCA for systems of urban water management and raises potential difficulties while applying LCA in the water sector.