A watershed is a topographic region in which all precipitation flows from an area of uplift toward a central valley. The North American continental divide bisects the continent as the landmass’ most consistent high point, usually found near the Rocky Mountains. Precipitation that falls east of the continental divide flows toward the Atlantic Ocean watershed, while precipitation that falls to the west of the divide flows west toward the Pacific Ocean watershed.

In Grand Teton National Park, the most apparent watersheds are located east and west of the Teton Mountain range. Precipitation falling on the eastern side of the range flows toward the Jackson Hole valley watershed. However, the rate of uplift of the Teton Range is occurring so quickly that the mountain peaks do not act as the dividing line between the two watersheds. In reality, the watershed is two kilometers west of the peaks due to the rate of erosion not occurring as quickly as the rate of uplift. Nonetheless, precipitation falling on the west side of the mountains flows into eastern Idaho. The Snake River Valley is its own watershed, collecting precipitation that falls on or near the Snake River.

Two Ocean Lake, in the northeastern portion of the park near Moran, was originally named due to the misbelief that the continental divide ran through the center of the lake forcing waves to move toward opposite shores and opposite watersheds. Subsequent mapping has determined that the divide is many miles to the northwest of Two Ocean Lake, yet the name remains.