Climate change models predict that rising global temperatures will produce in the U.S. southwest an extended period of shorter and drier winters, proportionately less snow and more rain, and reduced watershed yields. In New Mexico, water supplies for agriculture, municipal/industrial uses, and wildlife habitat are largely tied, directly or indirectly, to watershed yield already constrained by drought. With source water protection a critical issue, and increasing demands for water to support population growth, environmental protection, and economic development, any further reduction in water quantity or quality would adversely affect the quality of life and economic vitality. While studies show that high elevation zones produce most watershed yield, other evidence suggests the importance of the condition of the whole watershed, from alpine meadow to desert riparian zone. New Mexico recently completed two plans for watershed management, the FOREST & WATERSHED HEALTH PLAN and the NON-NATIVE PHREATOPHYTE/WATERSHED STRATEGIC PLAN. This presentation reviews the ecological condition of New Mexico forests, rangelands, and riparian areas, and outlines the comprehensive approach to watershed remediation proposed in those plans. It then assesses the potential for an integrated approach to watershed remediation and management to increase New Mexico water supplies, in light of research in New Mexico and elsewhere on the efficacy of watershed remediation to enhance water supplies. Watershed remediation is proposed as an important addition to the toolbox of water management strategies that provides economic, social, and ecological benefits not usually associated with, and perhaps less costly than, conventional models of water supply enhancement.