Participation of stakeholders at the local level is evolving as a mechanism to address complex environmental problems, not least water pollution. Participation has been used as a tool for the economic and social empowerment of settlements within the catchment of the Korle lagoon in Ghana, particularly residents of the Old Fadama community that live in proximity to the lagoon. Using direct observations and survey of stakeholder groups, the paper examines the structure and process of participation of stakeholders in Korle lagoon resource use and water policy formulation and implementation with regard to Korle Lagoon Ecological Restoration Project (KLERP). The results show that exclusion of stakeholders generates conflict and antagonism which hinders the implementation of water resource policy. Alliances of stakeholders in the participatory process have served as pressure points compelling government to negotiate with civil society on behalf of the community. In theory, participation holds promise to address conflict, however in practice, a number of factors that feed into conflict characterise the process of participation in this case, such as ineffective information flow in the community, agency-structure dynamics, historical antecedents among the ethnic groups and low-levels of communication. These gaps jointly undermine the full participation of the Old Fadama community in lagoon management.