The behaviors of the relevant benefit bodies of water sources, cities and water users under different decision modes are discussed based on the game theory. Four allocation modes of water resources are analyzed, that is, individual decision-making by water users, city government-led allocation, market transaction and market allocation under government regulation. It is regarded that the market allocation under government regulation is the relatively optimal mode. On this basis, some related policy issues are discussed, such as implementation and protection mechanism of water rights in the trans-regional water sources, allocation of water resources under the total water consumption control, and water right transaction and ecological compensation in water source areas. Finally, some policy suggestions are put forward.