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Freshwater systems in Australia face escalating threats from pollution, over-extraction, and anthropogenic climate change. Yet dominant approaches to water governance remain entrenched in extractive, technocratic paradigms. Despite holding primary jurisdiction over water governance, Australian state governments have been slow to reimagine sustainable water futures and to meaningfully incorporate Indigenous knowledge systems. In response, the Victorian government’s recent legal recognition of the Birrarung (Yarra River) as a living entity marks a significant departure, drawing on global currents in ecological jurisprudence - including from elsewhere in Oceania, Latin America, and Asia. This paper examines the emergent co-governance model established under this legislation, which brings together state and local authorities, civil society organisations, and Indigenous communities in the protection and management of the river. Based on ethnographic fieldwork with key actors involved in the implementation of these governance arrangements, the paper explores how Indigenous onto-epistemologies and custodial responsibilities are negotiated, translated, and, at times, constrained within settler-colonial legal and bureaucratic infrastructures. Ultimately, this case illuminates how legal innovations may open space for decolonial water governance, while also revealing the structural constraints that continue to shape the politics of recognition in settler-state environmental regimes.