This chapter explores the relationships between the two main groups of actors–smallholders and tobacco- processing companies–in the Tanzanian part of the global value chain for tobacco. The global tobacco industry is dominated by a handful of large international cigarette manufacturers that have amassed significant financial, political and social influence in the global value chain (GVC) for tobacco. The chapter deals with an elaboration of the notion of governance provided by the GVC literature. Smallholder tobacco production was promoted in the mid-1950s by the then Tanganyika Agricultural Corporation and the East African Tobacco Company, a subsidiary of one of the largest international cigarette companies. From 1995, and with the implementation of structural adjustment programmes, the state gradually started to withdraw from direct involvement in the tobacco value chain. Under the liberalised market, tobacco production continued to be practised under contract farming arrangements between the smallholders and the tobacco- processing companies.