Abstract: With the acceleration of industrialization and population growth, many traditional water-abundant cities in China are now faced with severe water resources problems. It’s quite necessary to build water rights trading system which has been proved to be a good assistant measure for water optimal allocation to improve the water resources management in these cities.  As an example, the improvement of water environment quality and economic restructuring in Wuhan city are analyzed and are concluded to be the main driving forces of water rights trading . In view of the characteristics of water rights system in China and the specific conditions of water resources in water-abundant cities, the initial allocation of water rights, trading mode, term of validity, trading price and regulatory mechanism are respectively discussed and a framework of the system is built.