Negotiations to resolve the dispute over the legal status of the Caspian Sea have been long and uneasy, and began with highly divergent, if not mutually exclusive, positions of the littoral states. This article briefly reviews the negotiation process over the division of the Caspian Sea and the positions of each littoral state in it, identifies the key milestones passed in this process, and attempts to uncover why and how it was possible to come to a common agreement and sign the Convention on Legal Status of the Caspian Sea. It also presents the big picture of what the new status will actually turn out to be. Finally, the article identifies two key issues— namely, (1) delimitation of highly contentious sectorial borders of the seabed in the South Caspian and resultant clarification of the ownership of the disputed fields, and (2) construction of underwater trans-Caspian pipelines—as the major problems that still await resolution in order to achieve a final settlement of the Caspian Sea legal dispute.