The purpose of this study is to examine the water supply challenges in Oyo state and to provide adequate suggestions that will enable the state to meet up with the Millennium Development Goal. A thorough investigation was carried out through a review of existing literatures having the same motive as the author. Data were collected from reliable officials so as to establish the fact that, Oyo state inhabitants are facing the problem of insufficient supply of water. The study revealed that the population of Oyo state will continue to increase at the rate of 3.35% population growth. Result of the data collected showed that, the population of Oyo State in 2006 was 5,419,327 whereas the projected population at the end of 2015 is estimated to be 7,290,200. The total output of the nine water supply schemes in the state is 246,302,000 litres daily. However, the millennium development goal set a standard daily water need per person within the range of 50 to 100 litre. 100 litres per person per day was adopted for this study which was multiplied by the projected population to determine the daily water consumption of Oyo state which will rise to 729,020,000 litres daily by the end of 2015. Based on this fact, it was observed that the state will experience short fall of 482,718,000 litres daily by the end of 2015. Having established that there is water supply challenges in Oyo state, the authors recommended that, the state government should upgrade the existing water schemes in order to meet water requirement of the state.