This paper examines some effects of the pursuit of neoliberalism on regional development policy and practice in Australia, and in particular on the activities and effectiveness of regional development organisations. The paper interprets data from a survey of 505 regional development organisations across Australia through the framework of Jessop's contribution to state theory and his identification of four key trends in economic management under neoliberalism. Regional development policies are seen as a response of governments to electoral pressure from regions, but a response that is constrained by the dominance of neoliberal ideology. The objectives of regional development are predominantly economic, but are often limited to the role of facilitation and the provision of information. Some responsibility for regional development has been shifted downwards to regions, but the effectiveness of the organisations given this responsibility is reduced by the short‐term and competitive nature of much of their funding, the lack of coordination between regional development actors at the local level, the proliferation of agencies and the competition between them. The paper concludes that regional development agencies in Australia are in many ways a product of neoliberalism, since they represent one way in which governments can be seen to be responding to regional pressure for assistance but they can do so without incurring significant costs. Yet regional development bodies are also a victim of neoliberalist thinking, since it denies them the resources and the powers they need to be more successful in their work.