This research investigates the institutional implications of co-production as a strategy for development. The study is located within international debates on global development targets beyond 2015 and how cities of the Global South meet the challenges of urbanisation and informality. With forecasts indicating the continuing growth of urban populations, there is an urgent need to consider how governments, working collaboratively with communities, meet the burgeoning demand for housing and basic services and create the institutions necessary for sustainable urban development. Co-production is examined empirically through an embedded case study with the Zimbabwe Homeless People's Federation, its partner NGO Dialogue on Shelter Trust and the City of Harare Council. The research traces how co-productive relations have evolved between these stakeholders over the period 1997 to 2013. Co-production is considered as a mediating function that supports the creation of spaces for dialogue and problem-solving in complex urban environments. Drawing on sociological institutional theory, the thesis examines the implications of co-productive working on the discursive representation of people in poverty and the institutionalised practices of the state toward low income communities. The research finds that the organisational and deliberative processes associated with co-production are formative: contributing to the efficacy of low income communities and the state to address housing and basic service needs. The thesis reports firstly that community mobilisation has a significant role in bringing together the financial and human resources needed to contribute to co-production. More importantly mobilisation provides the social infrastructure needed to create agential communities. Secondly, where organised communities are involved in the governance of development projects, there is an enhanced capacity to problem solve, which galvanises state support for progressive policies. Thirdly, the research in Harare identified that processes and practices of co-production stimulate adaptation of institutional arrangements. These gain significance over time as they accumulate to affect discourse, epistemic practice and lead to small scale institutional change. The research confirms the potential significance of co-production for sustainable urban development. For communities, co-production serves to shift their subjectivity within existing institutional configurations; creating the potential to act outside of normatively defined roles. For the state, co-production creates an opportunity to establish spaces of deliberation that provide an infusion of resources and can bolster failing legitimacy. However, evidence from Harare also underlines that co-production is contextually defined and adaptive change is fragile in the face of stronger forces of politics and elite interests.