The background, existing problems and current environment of investment enterprises of water conservancy institutions in China are discussed. It is revealed that the investment enterprises of water conservancy institutions must be fit to the national reform of institutions and state-owned enterprises, requirements of water conservancy development and change of market environment. Some measures are proposed to improve the healthy development of investment enterprises of water conservancy institutions, that is, to reform management system, to clean up and integrate investment enterprises, to promote reform by sorts, to transfer operation system, to strengthen the internal control and supervision, and to release the related supporting policies.