This paper analyses the central role of water infrastructure in the transformation of hydrosocial territories through a case study in the Forquilha catchment in Brazil’s Nordeste. Decentralised state-led infrastructural development reinforced the resilience of communities to drought, leading to more sustainable water access by many families; this was further magnified through individual and collective initiatives. However, this entailed the overdevelopment of small-scale hydraulic infrastructure and the formation of small community-based hydrosocial territories, which changed water flows and social relations at different scales. We show how this has led to the loss of hydraulic connectivity and the fragmentation of the catchment and how it has weakened collective action vis-à-vis the state. The state staged a remarkable interventionist comeback in the catchment by connecting medium-sized reservoirs in the upstream part of the catchment to urban water supply networks. In the absence of negotiated water reallocation, this may lead to the loss of water and livelihoods by vulnerable groups.