Purpose-How knowledge management theories and frameworks are applied in the public sector is not well understood due to little evidence being published in the literature. This paper aims to identify core issues and challenges that governments face in delivering effective public policy, particularly challenges presented by increasing community expectations, and to highlight the importance of developing public policy via knowledge-based partnerships with its stakeholders. Design/methodology/approach-Arguments draw on relevant theory in knowledge management and related fields as well as from public sector experiences. Findings-The main discussion examines some issues, challenges and opportunities in public policy developments and proposes some practical models to assist governments develop and capitalize on more effective knowledge-based stakeholder partnerships. Practical implications-This paper suggests that some existing process frameworks can provide a good starting-point to capturing knowledge about stakeholders, highlighting how stakeholders interact with policy development processes. The reviewed literature and ideas proposed herein classify stakeholders from a number of different perspectives and attempt to provide some practical assistance to governments in developing more effective and strategically guided stakeholder policy partnerships, including more effective use of resources and improved knowledge transfer. Such frameworks need to be viewed as being dynamic and stakeholder classifications need to be monitored continually. Originality/value-This paper highlights the need for more effective government and stakeholder partnerships to develop better public policy, including providing governments with cost-effective avenues to knowledge and expertise, and facilitating greater public accountability. Several processes are suggeted that can facilitate more transparent and effective two-way knowledge transfers between public organizations and stakeholders, which are fundamental for establishing successful partnerships.