This article is based on recent transnational research on partnership‐based initiatives to promote local development and regeneration and combat social exclusion in the EU. The increasing reliance on partnership as the basis for local policy initiatives is first situated in the context of contemporary debates about social exclusion. The main part of the article then draws on the literatures on local governance and urban regime theory to examine three issues critical to the impact of the ‘new orthodoxy’ of local partnership: the capacity of partnerships as interorganizational forms of local governance; their inclusiveness; and the extent of outcomes which can be attributed to partnership as a distinctive mode of local governance. On all three issues, the evidence points to the limited claims that can be made for most local partnerships as ‘inclusion coalitions’ capable of effectively tackling social exclusion, and suggests that structural features of the currently dominant version of partnership entrench a model of elite rather than inclusive governance. Local partnership is associated with weak rather than strong discourses of social exclusion and inclusion, and its significance lies as much as anything in the way in which the practice of partnership tends to foreclose the sphere of debate and action, excluding more radical options.