Governance research has become strikingly multifaceted in terms of theory, methods and empirical focus. More attention has been given to the spatial and scalar dimensions, and research are becoming more context-sensitive and process-oriented. Drawing upon on results from several research projects and programmes conducted by the authors and some other researchers this article offers an analysis of the development of Swedish central-local government relations since the 1990s. Analysing the constitutional, financial and multi-scalar/multilevel changes of these relations since the end of the Millenium, the strong neoliberal imprint upon ideology and practices is highlighted, showing how de-regulation gradually intermingled with re-regulation, combining market-driven, public welfare provision with measurement, evaluation and control. The article also bring to the fore sustainability, climate change and immigration as local policy fields characterized by horizontal capacity-building involving municipalities, private companies and civil society. Gradually municipal and regional government came under pressure by contextual challenges such as an elderly population, increasing number of school children and integration of immigrants. Related to this central state regulations and obligations multiplied and complicated local policy-making. As a broader discursive framework of the study the analysis is related to Antonino Palumbo’s (2015) exploration of post-war policy development in Europe in the light of two contesting, but complementary, ‘research programmes’, the Regulatory State and the Networked Polity. Finally, the article bring attention to the huge pandemic challenge facing humanity and governance at all levels beginning in spring 2020. What role municipalities will find in this critical juncture remains to be seen.