In the last decade, the South Korean government has implemented an unprecedented series of plans and policy actions to promote sustainable development, including the National Strategy for Green Growth. Some of these initiatives were direct responses to the evolving challenges in the water sector, and put forest hydrological services into perspective. To a certain extent, water was managed within a wider environmental context through the combination of forest and water management. However, the efforts to enhance forest hydrological services did not correspond to the immense potential of forests for the achievement of sustainable water management. We present a comprehensive and current view of the major challenges and opportunities related to forest hydrological services in South Korea. We identify key forest hydrological services in view of the major biophysical, environmental, and economic challenges in the water sector. We propose guidelines for the enhancement of forest hydrological services and for a better inclusion of these services in South Korea's sustainable development strategy. An increased contribution of forests to the provision of high-quality water in sufficient, regulated amounts, and to the preservation of a safe environment in regards to natural hazards is imperative for the long-term development of South Korea.