Rising world demand for petroleum and natural gas makes the Caspian Sea and its resources the focus of increased international attention. This article examines the controversy over the legal condition of the Caspian Sea, both in terms of delimination questions and its status as a lake or a semi-enclosed sea. The natural resource potential of the Caspian is assessed, with a view to highlighting its hydrocarbon and fishery resources, as well as the environmental implications posed by development of industry and pipelines throughout the region. Also examined are the geopolitical priorities of the five Caspian littoral states, as well as the need to maintain the region as a zone for peaceful commercial enterprise and economic development. Toward these ends, the study concludes with an evaluation of the realistic prospects for collaboration among the Caspian states to protect the environment as evidenced by the recent negotiation of a special convention dedicated to that purpose.