The Baltic Sea region has in recent years become known as a pioneer of new modes of governance, reflecting the dynamic development of the network society. At the same time, the Baltic Sea is considered one of the world's most polluted seas, especially in terms of eutrophication, the accelerated enrichment of nutrients in the water. Overall, there is a contrast between the formally successful governance system and the actual state of the Baltic Sea. This paper describes the existing Baltic Sea environmental governance system, from the regional regime to non-governmental actors, noting that highly institutionalized inter-state and transnational environmental cooperation adds a greater element of hierarchy for environmental governance in the region. Supporting democratic development is a special requirement for governance in the post-Cold War context. The paper explicates governance challenges posed by the emerging network society, on the one hand, and the problem of eutrophication, on the other, and makes suggestions on how to develop the governance system in order to meet the challenges. As a conclusion, a general lesson for the management of international water bodies is given. Institutional diversity with many different scale preoccupations is key, but so is the need for leaders to overcome the challenges of polycentric governance: that is, to reduce opacity of governing and to increase the power of stakeholders to define the problem and its solutions in the first place. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.