The rapidly growing urban centres throughout the world are facing serious problems due to the fast-changing developments in all of their environmental spheres (nature, society, politics, culture and economics). Therefore, strategic planning becomes even more important in order to develop strategies that allow cities to adapt to new challenges and to prevent or to mitigate negative trends. This paper presents a transdisciplinary approach to water management, which combines adaptation and application of methods from hydrology, social sciences, water engineering and modelling; furthermore, this approach also involves stakeholders in this process. This methodology assists cities in addressing risks by elaborating solutions, which are characterised by ownership and acceptance of the stakeholders involved. The presented methodology proposed here has been applied to the water system of the desert megacity of Lima/Peru. As a city of almost 10 million inhabitants and with an annual rainfall of about 10 mm per year, Lima presents a unique case with particular challenges regarding water supply. In order to assess the changes in precipitation and temperature for the next decades, two global circulation models and three scenarios have been used. Changes in discharge was addressed using the conceptual rainfall-runoff model HBV applied in both the Atlantic and Pacific catchments relevant to the capital city Lima in terms of water supply. A scenario methodology, combining qualitative and quantitative elements, based on the Cross-Impact Balance Analysis, has been developed and applied. From the millions of theoretically possible combinations of future developments of “descriptors” (driving forces) of the water system, four have been identified as the (only) consistent potential developments of the future. Local stakeholders, stemming from a wide range of institutions have been actively involved in the definition of these driving forces and the set of scenarios. The evaluation of these scenarios and potential options to adapt the water system to future developments was carried out by modelling and simulation, using a purpose-built, yet general, simulator which represents the entire water and wastewater system and includes the important inherent feedback loops (e.g. water demand by irrigation, reuse of treated and untreated wastewaters). The setup of the simulator and the implemented models was done in a way that the simulator formed an integral element in the design of strategies and measures, derived by this innovative combination of qualitative scenario building, quantitative modelling and stakeholder participation. As a core result of this process, the Action Plan “Lima 2040” has been developed and adopted, in which the signatories (the main institutions and organisations responsible for the water sector of Lima) commit themselves to specific actions to be implemented over the years to come.