Few studies worldwide have analysed how to manage equitably the process whereby ‘customary’ or ‘common’ land can be incorporated into future urban development, particularly in so far as this might be achieved through privatization and deregulation. This paper focuses upon Mexico and the 1991–2 reforms of Article 27 which dramatically changed the tenure codes and political relations covering the widespread customary land sector — called ejidos. It is argued that, in effect, the reforms constitute deregulation of former tenure relations rather than outright privatization, and that rather than being radical in content, the reforms are subtle redefinitions of past practices in which the balance of administrative power over ejidal land has shifted significantly, away from the Agrarian Reform Ministry towards the Social Development Ministry and local (city) government. Deregulation appears to offer three principal scenarios for public and private sector ejido land development: Urban Development Companies, Joint Ventures and Extension to the ‘Urban Zone’, yet to date there is little evidence that any one has proven sufficiently attractive to be pursued intensively, and the paper suggests that illegal alienation of ejido land is likely to continue and may get worse. However, the latest Urban Development Program 1995–2000 identifies ejido land deregulation and urban development as one of its principal strategies, tied to President Zedillo’s New Federalism project, which seeks to strengthen municipal and state government capacity and effectiveness. This profound shift in the structure of political managerial authority and responsibility offers the increased likelihood that land regularization practices and urban planning of the now deregulated ejidos will become more significant in the future.