Reforms designed to improve the quality of teaching by reforming personnel practices, such as pay for performance arrangements, usually run into opposition from well-organized teacher unions that can either block reform in the short run or undermine it over the longer term. The experience of a series of reforms that introduced collective and individual pay incentives for teachers in Chile from 1990 to 2010 provide a rare example of ongoing negotiation with the teacher union that resulted in an institutionalized structure of incentive pay for teachers as well as widespread attitudes of sustained support among teachers for performance pay. Chile offers an important example of how sustained change in incentive pay can be achieved through ongoing negotiation.