This chapter examines the evolution of the concept of urban policy in the realm of urban governance and urban development in developing countries. This evolution “in the real world” is noteworthy, because it demonstrates an ever-broadening understanding of the multiple arenas in which urban policies operate and affect people’s lives. The focus on urban management coincided with a growing emphasis in European countries on the notion of “subsidiarity,” that decision-making authority should be located as close to real problems on the ground. One of the most interesting changes in urban practice in the post–World War II period has been the shifting perception and use of appropriate urban policy instruments. A lesson from the implementation of some national urban policies has been that their application in local contexts often is “anti-poor” and ineffective in strengthening local urban institutions at the city level to perform essential urban management functions.