The year 2005 marks the beginning of the "International Decade for Action: Water for Life" and renewed effort to achieve the Millennium Development Goals (MDGS) to reduce by half the proportion of the world's population without sustainable access to safe drinking water and sanitation by 2015. Currently, UNICEF and WHO estimate that 1.1 billion people lack access to improved water supplies and 2.6 billion people lack adequate sanitation. Providing safe water and basic sanitation to meet the MDGs will require substantial economic resources, sustainable technological solutions and courageous political will. We review five major challenges to providing safe water and sanitation on a global basis: (1) contamination of water in distribution systems, (2) growing water scarcity and the potential for water reuse and conservation, (3) implementing innovative low-cost sanitation systems, (4) providing sustainable water supplies and sanitation for megacities, and (5) reducing global and regional disparities in access to water and sanitation and developing financially sustainable water and sanitation services.