This report describes the Groundwater-Management (GWM) Process for MODFLOW-2005, the 2005 version of the U.S. Geological Survey modular three-dimensional groundwater model. GWM can solve a broad range of groundwater-management problems by combined use of simulation- and optimization-model- ing techniques. These problems include limiting groundwater-level declines or streamflow depletions, manag- ing groundwater withdrawals, and conjunctively using groundwater and surface-water resources. GWM was initially released for the 2000 version of MODFLOW.