This review paper is an attempt to analyze the existing literature on hydro-hegemony (HH) theory, which has emerged to explain transboundary water interactions. The literature highlights that the conventional water interaction literature inadequately deals with three important factors: (i) asymmetric power relations, (ii) varying intensities of conflict, and (iii) the importance of the geographical location of riparian states. Since its emergence, it has evolved both in theory development and in application to transboundary basins. Although, an attempt has been made earlier by Warner et al. (2017) to review, organize, and evaluate the overall literature on HH, the review itself is somehow silent on the hegemonic approaches to assess its contribution to the transboundary water governance literature and to identify the existing and future research gaps. This paper, however, not just addresses these omissions to (i) review the scholarly literature on HH; (ii) explore the challenges associated with power, cooperation, and conflict; and (iii) identify and explore potential trends in HH theory, but it also gives special attention to the hegemonic approaches within states’ boundaries and the ingredients to enrich the theory and research agenda of HH.