As economic research has increasingly paid more attention to the forces of economic geography, it has become much more ‘location aware’ in its analysis of the drivers of growth, productivity and innovation. The nature of regional policy has also evolved in many countries, with competitiveness upgrading emerging as a more important goal. In Europe, requirements for regions to outline ‘smart specialization strategies’ to be eligible for funds available through the European Union regional policy programmes are an example of this trend. This chapter explores what this new context implies for the role of regional governments. It is motivated by a concern that regional policy is facing an ‘implementation gap’. There is much thinking on the importance of regions, and the policies that should be designed towards them. However, there is comparatively little work on what regional governments’ role should be in implementing these policies relative to that of other levels of government, and what implications this has on the capabilities required. The chapter reviews the literature on regional economies, regional policy and the role of regions in government. These related streams of work provide the backdrop for thinking about the demands that government in general and regional government in particular are facing. The chapter then proposes a new way to look at the role of regional government, focusing on specific functions and the different but often complementary roles that different levels of government play. It draws on this identification of functions to discuss the capabilities that regional governments need to fulfil their tasks.