Industrial wastewater discharge remains a critical threat to sustainable water resource management, yet how institutional accountability arrangements constrain urban pollution behavior under decentralized governance systems is insufficiently understood. This paper exploits the staggered provincial rollout of China's River Chief System to construct a staggered difference-in-differences model using panel data covering 285 prefecture-level cities from 2013 to 2020. The results show that River Chief System implementation reduces urban industrial wastewater discharge intensity by approximately 7%, a finding that holds across parallel trends tests, placebo tests, and alternative estimators including the Callaway–Sant'Anna and Sun–Abraham approaches. The reduction is also visible in the discharge of chemical oxygen demand and ammonia nitrogen, the two pollutants targeted by China's water quality assessment. Policy effects, however, vary systematically across cities: a higher political rank of the provincial chief river official strengthens downward accountability transmission; greater water resource scarcity raises local officials' implementation initiative; and higher fiscal self-sufficiency enables more effective translation of institutional mandates into enforcement actions. The policy works in part by raising local environmental enforcement effort and encouraging a shift toward cleaner industrial activity. These findings suggest that embedding water quality targets within political career structures, combined with differentiated fiscal support matched to city-level resource endowments and capacities, offers a more robust pathway toward sustainable water governance than relying on short-term policy shocks alone, with implications for decentralized water management in other developing economies.