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The management and mitigation of chemical pollution are key elements of sustainable development initiatives that aim to provide safe and clean water. While environmental scientists are developing the capabilities to assess the fate, (eco)toxicity and risks of a plethora of synthetic chemicals comprehensively, notorious pollution scenarios and decontamination challenges call for targeted and case-specific evaluation of chemical hazards. Here we review the utility and perspectives of compound-specific isotope analysis for obtaining an understanding of environmental processes that allows one to identify pollution sources, assess contaminant (bio)transformation and gain insights into reaction pathways. Using three prototypical scenarios of water contamination, namely point-source pollution of groundwater at contaminated sites, diffuse pollution of soils and surface waters through pesticide use and the abatement of pharmaceuticals and disinfection by-products in water treatment systems, we illustrate both success stories of compound-specific isotope analysis and current developments to address challenges for future applications.