The literature on dynamic mathematical models of water quality in streams and the temperature effect on DO and BOD concentrations is reviewed. A method of optimal control is applied to the determination of an optimal cooling water discharge policy of a power plant. The spatial distribution of temperature and its temporal change and their effects on the BOD and DO distributions in a stream are simultaneously determined. The development of optimal feedback control theory through the continuous dynamic programming and continuous maximum principle is reviewed. The development initially deals with linear systems and is then extended to nonlinear systems and distributed parameter systems. The management of a complex water quality control system is also studied. The determination of minimum-cost control policies for a basin (a multi-stage system) which receives the thermal waste from power plants and the organic waste of BOD discharges is investigated by applying the generalized reduced gradient method.