The limited availability of water resources and the increasing rate of water demands in many urbanizing areas have caused more conflicts among competing water users in shared water systems and consequently, created some environmental, socio-economic and political challenges. Therefore, for sustainable management of common pool water resources, the behaviors of the main stakeholders and their interactions should be taken into account. In this paper, a new conflict resolution model based on the agent-based modeling approach is introduced for the evaluation of different water management policies through the simulation of all stakeholders’ behaviors. Moreover, the leader-follower interactions among stakeholders are modeled using the Stackelberg game theory-based model. The methodology is applied to the western part of Tehran, Iran, as a developing urban case study, where there are different stakeholders and water users with conflicting objectives. The results illustrate the applicability and efficiency of the methodology in modeling and managing complex shared water resources systems that are suffering from socio-economic and environmental issues.