Regional governance describes the structures, processes and relationships by which decisions are made, and power exercised and shared, at spatial levels larger than localities and smaller than the States in most parts of Australia. This paper reports on the first of three case studies examining the current nature and future evolution of regional governance, as part of an Australian Research Council Discovery Project. Focused on the rural and remote region of Central Western Queensland, the study confirms the significance and the potential of the 'region' as a spatial unit of governance, and both the importance and complexity of questions of institutional design for the future of Australia's regional level. It locates some of the strengths of regional governance, including the dynamic and responsive nature of informal partnerships, collaboration and networks, but also records the challenges flowing from human capital shortages, wider intergovernmental conflict, problems of financial sustainability, and other issues including undeveloped frameworks for leadership and coordination. Identification of these challenges provides a basis for comparison with the governance of other regions, and exploration of more coherent, national policy solutions for resolving the place of the region in Australia's federal system.