Barcelona and Manchester have become paradigmatic examples of ‘governance‐beyond‐the‐state’, ‘new localism’ or ‘local state entrepreneurialism’. Whatever the label, citizen participation has become a key feature of governance in each city. This article argues that a useful way of understanding the developing relationship between governance and citizen participation is through the analytical perspective of governmentality. This perspective illuminates two paradoxes that characterize the new governance arrangements in these two European cities. The first paradox is that the power of the state is not necessarily diminished despite the emerging plurality of actors involved in governance. The second paradox lies in the fact that the spread of participatory practices as an integral element of new modes of governance does not necessarily lead to citizen empowerment.