Many towns in the Indian Himalayan Region (IHR) are experiencing permanent water crises due to increasing population pressure, urbanization, and poor management of existing water sources. This paper focuses on two towns – Mussoorie and Devprayag in the western IHR – to understand various aspects of the growing water scarcity and urban water management. In the current scenario of a changing climate, natural springs, their main water resource, are drying up. Mussoorie experiences an acute shortage of water in summer, precisely when the town hosts numerous tourists. In Devprayag, religious tourism and in-migration from rural areas contribute to rising demand. The reduced discharge in nearby streams has widened the demand–supply gap. An integrated management of water sources is crucial to solving water problems in Mussoorie and Devprayag. In both towns, little effort has been made towards recharging existing water sources. Detailed planning of the water supply system while being mindful of the floating population, a proper sewage and storm water management system, and rainwater harvesting schemes, are absent. There is an urgent need to adopt a comprehensive approach to solving urban water issues, covering aspects of demand, supply and water resources management in these hill towns for adaptive water management.