The effect of dairy farming on water quality in New Zealand streams has been identified as an important environmental issue. Stream fencing, to keep cattle out of streams, is seen as a way to improve water quality. Fencing ensures that cattle cannot defecate in the stream, prevents bank erosion, and protects the aquatic habitat. Stream fencing targets have been set by the dairy industry. In this paper the results of a study to identify the factors influencing dairy farmers' decisions to adopt stream fencing are outlined. Qualitative methods were used to gather data from 30 dairy farmers in four New Zealand catchments. Results suggest that farm contextual factors influenced farmers' decision making when considering stream fencing. Farmers were classified into four segments based on their reasons for investing in stream fencing. These reasons were fencing boundaries, fencing for stock control, fencing to protect animal health, and fencing because of pressure to conform to local government guidelines or industry codes of practice. This suggests that adoption may be slow in the absence of on-farm benefits, that promotion of stream fencing needs to be strongly linked to on-farm benefits, and that regulation could play a role in ensuring greater adoption of stream fencing.