This article investigates the negotiation of statehood in Somaliland, a non-recognized de facto state which emerged from Somalia's conflict and state collapse. The negotiation process centres on the continuing transformation of a hybrid political order, involving ‘formal’ as well as ‘informal’ spheres, both in existing institutions (as ‘rules of the game’) and in the bodies or agents enforcing these rules. The negotiation processes considered take place at the national and local level respectively, as well as between the two. These negotiations are heterogeneous, non-linear and ongoing. The article demonstrates how the polity's tolerance for heterogeneous negotiations and different forms of statehood allowed local political actors to establish peace in their own local settings first. Although it did not produce uniform statehood, it provided the basis for communities to explore the scope for common statehood. On the national level, hybrid elements initially allowed for a healthy adaptation of statehood to local needs, and for legitimate, productive instruments of negotiation. This responsiveness was not maintained, and current hybrid elements threaten to undermine the polity's stability.