ABSTRACT Literature on participatory slum upgrading often simplifies the political landscape of informal settlements, portraying them as homogeneous communities, and focuses instead on infrastructure, housing, tenure regularization, participatory design and project implementation. However, many informal settlements across the Global South are sites of territorialized party politics competing for community leadership and support. This article analyses the case of the highly contested upgrading programme of Playón de Chacarita, an informal settlement in Buenos Aires. Drawing on qualitative research methods, the study unpacks the political, social and economic divisions arising from the territorialization of politics and analyses their impact on the implementation of an upgrading programme. It advances current debate by showing how politics and policies mesh in the upgrading programme in messy and complex ways, with residents joining participatory meetings and clashing with public officials, but also fighting among themselves. This research explores how territorialized party politics can create profound communal divisions, exacerbate conflicts and threaten project execution while, paradoxically, improving intervention outcomes, advancing housing rights and sustaining community activism, especially in the face of a lack of participatory institutions.