Despite the fact that rainwater is in abundant supply in the humid tropics, this resource is still being underutilized for domestic purposes when compared with other sources of water. A study was thus conducted to assess the sustainability and challenges facing optimal exploitation of rain water. A survey was conducted in 125 rural communities with at least five rural communities selected from 25 rural Local Government Areas. The results showed that people’s perception of rain water, inadequate storage facilities, availability at home during the rain incidence and seasonality of rainfall were the challenges of effective utilization of rainwater in the rural areas. The study further discovered that rain water is dependable as for domestic uses between the months of April and October while the dependence level of rain water from the months of November and March is about zero. A paired sample T-Test results showed that there is a significant difference between the average monthly water demand and the monthly storable water at 1% level of significance. This implies that stored rainwater is not sufficient to cater for the household water demand. Hence, it is suggested that exploitation of rain water should be encouraged by boosting the capacity of the rural dwellers so that they can acquire storage facilities that will enhance sufficient storage. Stakeholders can also support this campaign through economic empowerment of the inhabitants in the rural areas so that underground water can be protected for the purpose of rain water exploitation.