In this article I examine subjective identity transformations among those who take part in programs of participatory governance, particularly the innovative mechanism of municipal resource allocation called the Participatory Budget. Focusing on the engagements of Porto Alegre city squatters, I aim to capture ambivalences that distinguish local and international discourses of participation and private property. Building on the dialectical relationship between narrative/figured worlds and positional identities, I view the Participatory Budget as a framework of meanings in flux within which some squatters who rearrange their positional identities along lines of social and power relations are then empowered to change their political practices. A novel emphasis on the distinction between squatters’ positional and embodied identities allows me to assess the political and psychological impacts of this form of participatory governance for people living in squatter settlements. I demonstrate the importance of embodied political practices and locally situated notions of male and female bodies in the squatters’ appropriation and refashioning of the identities imposed by local and international organizations.