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The Guggenheim Museum has had many ‘effects’ on the lives of local citizens and politicians in Bilbao as well as on wider communities such as architects, planners, cultural policy-makers or museologists. This article, however, deals with the effect that the museum has had on the urban governance practices in Bilbao. Urban policy literature has clearly identified that contemporary cities are adopting an entrepreneurial approach to deal with increasing pressures to compete with each other and attract investment in a globalized world. This approach is connected to neo-liberal state policies that threaten social inclusion and democracy. The Guggenheim Bilbao Museum has to be considered within this wider trend and has played an important role in the consolidation of urban entrepreneurialism in Bilbao. The danger is, as I will show, that these practices can be taken for granted without internal reflection, and can therefore be institutionalized in urban policy.