A fi rm’s alliance capability refers to its ability to design, manage and terminate alliances successfully. An alliance capability thus can enhance the overall performance of a fi rm’s alliances, in that it enables the fi rm to purposefully create, extend or modify the routines it uses to inform its alliance decision making. Firms develop alliance capabilities over time, but they also tend to capture only minimal knowledge or develop just a few best practices. In an environment with few alliances, such an ad hoc approach may be effective; however, the increasing importance of alliances implies that an unstructured approach will ultimately produce frustrating, unsatisfactory results. In contrast, a structured approach that embeds the alliance capability in the organizational design, culture and minds of employees enables the fi rm to build and deploy its expansive alliance capabilities more effectively. To adopt such a structured approach, alliance managers fi rst need to understand what alliance capabilities are (fi rst section) before they can gain insights into capability building and deployment (second section) and their own necessary competences (third section). In the next two sections we provide a systematic framework with a set of decision-making steps regarding alliance capabilities and a summary. We conclude with a case illustration.