In this paper, we examine how the 2008-2009 drought in northern Tanzania contributed to and catalyzed the transformation of governance concerning the management of natural resources from traditional informal institutions among the Maasai to formal village-based institutions. Our central argument is that village governance in northern Tanzania represents a new, formal institution that is supplementing and in some important ways obviating traditional, informal institutions. Further, this replacement is central to what appears to be a transformation of the social-ecological system embracing the rangelands and pastoral/agropastoral people in northern Tanzania. In this paper, we document the basis for our claims concerning the institutional shift and discuss its implications for livelihoods and social relationships.