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During the early years of the New Deal in the 1930s, water conservation funds became available to the states from the federal government. To take advantage of this opportunity, a special session of the Montana Legislative Assembly convened in late 1933 and created the State Water Conservation Board to channel both state and federal money into small irrigation projects. An individual farmer who wanted to build an irrigation facility petitioned the Board and, if his proposal was accepted, the Board built the project and the farmer reimbursed the state. By 1952, the State Water Conservation Board had built 173 projects throughout the state.

In 1965, the Board assumed the functions of the State Engineer and the Carey Land Act Board. In 1967, the Montana Water Resources Board was created to assume the duties of the State Water Conservation Board, and to coordinate all water resource development programs around the state. Other duties included the administration of weather modification laws and the preparation of a comprehensive inventory of the state's water resources and a multiple use water plan for the state. In 1971, as part of the general reorganization of state government, the Water Resources Board was abolished, and its functions taken over by the Water Resources Division of the Department of Natural Resources and by the Board of Natural Resources and Conservation.