Environmental issues and the management of natural resources have become a significant element of the binational relationship between Mexico and the United States during the last three decades. The environmental challenges now shaping the bilateral agenda for environmental cooperation are formidable and their address engages a rich and diverse set of institutions and stakeholders at multiple levels of government across the international boundary. This chapter studies environmental issues relevant to the two countries in the 21st century and suggests policy strategies to address them. The first part of the chapter discuss relevant environmental issues common to Mexico and the United States and their potential implications for their relationship in the short and long term. The second part analyzes binational efforts created to manage environmental issues and provide a critical perspective of their strengths and shortcomings. The last section of the chapter suggests recommendations to address those environmental challenges in the 21st century.