The organisation of governance in metropolitan areas is one of the most debated topics in urban social science. This long-running debate has long been dominated by the dispute between two intellectual traditions: the metropolitan reform tradition advocating institutional consolidation, and the public choice approach making the case for fragmentation and local autonomy. Since the 1990s, a new perspective has emerged – the so-called ‘new regionalism’ – emphasizing the role of network-based schemes of cooperation for area-wide governance. It echoes a conceptual shift in thinking about the ways in which the state could and should steer society, emphasizing governance through negotiation, rather than through hierarchy or market. Drawing on this conceptual background, this paper discusses the problems and prospects of area-wide governance in the metropolitan area of Sydney. The arguments will be developed in three sections. The first section is dedicated to the theoretical background of the debate on metropolitan governance, and develops the conceptual framework for the subsequent analysis of metropolitan governance problems in Sydney. This will follow, in the second section, with an overview of the key characteristics of the intergovernmental relations, as well as of the institutional setting that frames metropolitan governance in Australia in general, and in Sydney in particular. The third section presents results of my own research focusing on the process of elaborating the latest Metropolitan Strategy in Sydney. I will argue that the chances of achieving strong metropolitan governance capacity in the Sydney area are extremely weak under current conditions, due to a) strong intergovernmental tensions, b) high geopolitical fragmentation, and c) conceptual incoherence in the elaboration process of the Metropolitan Strategy. We discuss two possible routes towards strengthening metropolitan governance capacity: one ‘old regionalist’ and one ‘new regionalist’. It is concluded that, as the ‘old regionalist’ solution (e.g. the creation of a Greater Sydney Authority) is very unlikely to be realised, the ‘new regionalist’ solution should be pursued, the goal being to make the existing system of joint decision making more effective rather than trying to replace it.