This paper describes the origin and history of smallholding irrigation schemes (SIS) in previously disadvantaged rural areas of South Africa. It then analyses the implications of the 1998 National Water Act on those schemes. An analysis of water rights is presented, along with a brief case study on a water rights transfer. A number of contradictions, uncertainties and possible threats are highlighted, which may hinder further development in SIS. Most difficulties originate from the Act's lacks of clarity regarding water rights and from the objectives and socio-economic prospects of the schemes.