The San Luis Rey River Watershed is located in northern San Diego County. It is bordered to the north by the Santa Margarita River Watershed and to the south by the Carlsbad and San Dieguito River Watersheds. The San Luis Rey River originates in the Palomar and Hot Springs Mountains, both over 6,000 feet above mean sea level, as well as several other mountain ranges along the western border of the Anza Borrego Desert Park. The river extends over 55 miles across northern San Diego County forming a watershed with an area of approximately 360,000 acres or 562 square miles. The river ultimately discharges to the Pacific Ocean near the City of Oceanside. Of the nine major watersheds in the San Diego region, the San Luis Rey is the third largest.

About half (49%) of the land in the watershed is privately owned, 37% is publicly owned, and the remaining 14% consists of six federally recognized Tribal Indian Reservations. In the western half of the watershed, private ownership dominates. Population centers include the City of Oceanside and the unincorporated communities of Fallbrook, Bonsall, and Valley Center. Moving east through the watershed, public lands become increasingly dominant. Over 54% of the land in the watershed is vacant or undeveloped. The next largest land uses in the watershed are residential (15%) and agriculture (14%). Principal agricultural uses include cattle grazing, nurseries, citrus groves, and avocado groves.

The watershed is comprised of three Hydrologic Areas (HAs), which have been delineated by the San Diego Regional Water Quality Control Board based on drainage patterns: Lower San Luis (HA 903.1), Monserate (HA 903.2), and Warner Valley (HA 903.3). The Warner Valley HA is upstream of Lake Henshaw, a reservoir owned and operated by the Vista Irrigation District. Water from the San Luis Rey River is diverted approximately ten miles downstream of Henshaw Dam to serve the municipal drinking water needs of customers in Escondido and Vista.

There are many beneficial water uses within the San Luis Rey Watershed as designated in the State Water Resources Control Board's San Diego Region Basin Plan.