This paper presents an approach that uses policies to manage context-driven transactional Web services. Context feeds policies with details on Web services like current status, which permits aligning the behavior of these Web services to the transactional properties they need to satisfy. Context refers here to any information on the interactions a Web service initiates with peers and external environment. Three types of transactional properties are used namely pivot, compensatable, and retriable. Each property satisfaction calls for a set of policies that are specified with a policy language like WSPL. This paper also presents the adaptation strategy that supports developing context-driven transactional Web services. A prototype that implements this strategy is discussed in the paper, too. © Springer-Verlag Berlin Heidelberg 2007.