An emerging literature on ‘new municipalism’ has identified attempts not only to transform local state functions to respond to the urban crises of neoliberal austerity, but also to transform the structure and practices of the state itself, embedding democratic processes into local government. This article utilises the historical experience of the ‘new urban left’ within the Greater London Council (GLC) from 1981 to 1986 to explore the internal dynamics of state transformation in a context of municipal activism. It situates the GLC’s progressive policy responses to the urban crises of the early 1980s within a more quotidian project of state remaking, in which activists worked in-and-against the established political cultures and practices of the local state. The new urban left’s transformative, rather than simply instrumental, approach to the local state – rooted in the democratic politics of progressive social movements – challenges straightforward dichotomies between state and society. The article frames these nascent municipalist characteristics with a theoretical argument based on an autonomist-Marxist account of the state as a form of social relations, one that emphasises how capitalist crises pivot on the internal contradictions of labour. This reading directs theoretical attention to the ‘prosaic’ labour of state officials, and the article thus considers the quotidian experience of politicised officials in the GLC, whose activity blurred boundaries between political activism and professional labour. The practical contradictions involved in such forms of ‘activist state-work’– working within bureaucratic and legal limits, experimenting with new organisational forms, and negotiating contested workplace subjectivities – reveal forms of boundary-bridging between activism and statehood that highlight the potentially transformative dynamics within the labour of local governance. This unstable tightrope-walk between bureaucratic constraint and political agency at the nexus of state-work contributes to new municipalist thinking about reshaping the conduct of urban governance.