Ecosystem-based management (EBM) is the dominant paradigm, at least in theory, for coastal resource management. However, there are still relatively few case studies illustrating thorough application of principles of EBM by stakeholders and decision-makers. At Elkhorn Slough, a California estuary, we launched an EBM initiative in 2004. Stakeholders collaboratively developed and evaluated large-scale restoration alternatives designed to decrease two types of rapid habitat change occurring in the estuary, erosion of channels and dieback of salt marsh. In the end, decision-makers rejected large-scale alternatives altering the mouth of the estuary, and instead opted for small- to medium-scale restoration projects and recommended an added emphasis on reduction of nutrient-loading. We describe seven challenges encountered during the application of EBM principles: (1) interdisciplinary collaboration is difficult due to differences in professional culture and values, (2) roles and responsibilities of different participants are often not sufficiently clear, (3) implementing EBM is very costly in time and human resources, (4) an ecosystem services framework may not resonate with stakeholders already committed to biodiversity conservation, (5) conflicts arise from differences in desired restoration targets, (6) multiple geographic and jurisdictional scales cannot be simultaneously addressed, and (7) understanding of ecosystem drivers and processes may change rapidly. We recommend approaches to overcoming each of these challenges so that our experiences implementing EBM at one estuary can inform collaborative decision-making initiatives elsewhere. © 2015 The Authors.