This paper studies the interaction between different actors in the policy-making process of fiscal transfer reform in Colombia. To analyse this reform, we use the “life cycle of reform” framework. In that context, we follow critical phases in the reform process: planning, dialogue and adoption, and implementation and sustainability stages. This paper shows that the economic context and institutional factors, such as the new political structure for interactions between agents after the 1991 Constitution, were fundamental in achieving the reform. Moreover, it confirms previous studies showing that communication and compensation strategies play a key role in the approval of reforms. When the “sustainability” of the reform is analysed, this study shows that there is a need to improve the co-ordination of public policies at different levels of government.