AbstractTwo of the most important trends occurring in Latin America and the Caribbean during the past quarter century have been rapid urbanisation and government decentralisation. With approximately 75% of its 520 million inhabitants living in urban areas, the region has seen the emergence of such mega‐cities as Buenos Aires, Lima, Mexico City and Sao Paulo. At the same time, the region, partly on its own and partly prodded by international organisations and donors, has been struggling with the issue of decentralising its historically highly centralised national governments and strengthening its traditionally very weak and highly dependent local governments. In this article, the authors examine local governance structures in several major urban areas of Latin America in order to understand how these two sometimes highly contradictory developments are impacting upon the governance of metropolitan areas and the resolution of the major problems facing them. Particular attention is paid to emerging cooperative arrangements that may in the future help to address significant metropolitan area issues. Copyright © 2005 John Wiley & Sons, Ltd.