Existing legal and regulatory frameworks in Chile do not ensure adequate opportunities to address the trade-offs associated with hydropower effectively. As a result, hydro projects have become the focus of intense public protests and legal disputes. This article provides a historical overview of hydro development in Chile, and then analyses three elements of Chile's hydropower 'problem': the need for improved governance of the electricity and water sectors, more comprehensive and timely environmental and social impact assessment, and fuller respect for the rights of indigenous peoples affected by hydropower projects.