Declines in native plant and animal communities have prompted new interest in the restoration of aquatic and riparian ecosystems. Past restoration activities typically have been site specific, with little thought to processes operating at larger scales. A watershed analysis process developed in the Pacific northwest identifies four operating scales useful in developing restoration priorities: region, basin, water-shed, and specific site. Wtershed analysis provides a template for restoration practitioners to use in prioritizing restoration activities. The template identifies seven key steps necessary to understand and develop restoration priorities: (1) characterization, (2) identification of key issues and questions, (3) documentation of current conditions, (4) description of reference conditions, (5) identification of objectives, (6) summary of conditions and determination of causes, and (7) recommendations. When a similar process was used in the Uinta Mountains, Utah, and in the Sluslaw National Forest, Orgon, specialists were able to identify key habitat conditions and habitat forming processes and then to establish restoration priorities and implement the appropriate activities. Watershed analysis provides a valuable set of tools for identifying restoration activities and is currently being used throughout the Pacific Northwest to develop management strategies and restoration priorities. Although the analysis requires significant time, money, and personnel, experience suggests that watershed analysis provides valuable direction for managing aquatic and riparian resources.