The historical, political, socio-cultural and institutional context in the public service of Pakistan is not auspicious for the delivery of social services such as education. The then military regime introduced radical devolution reforms in 2001 that promised improvements in service delivery by enhancing accountabilities and capacities for change in local government. However the political economy of this top-down devolution has proved contentious. It established new power structures and authorities over resources at local levels but without concurrent efforts to enhance service delivery capacities. This article examines capacity issues in two cases of capacity development in education service delivery in Pakistan's largest province. The Punjab Education Sector Reform Programme (PESRP) was managed by a provincial-level implementation unit; the Strategic Policy Unit (SPU) of City District Government Faisalabad was a local government project supported by technical co-operation. Both delivered major improvements in education delivery capacity in just 4 years, after decades of delivery stagnation and worsening education indicators. The sustainability of these initiatives is in doubt, as political economy factors remain a major impediment to devolved service delivery in Pakistan. Copyright © 2009 John Wiley & Sons, Ltd.