Industrial clusters have traditionally played an important role in Italy’s economic development, especially in the central and northern parts of the country, and today account for 30% of manufacturing exports. However, since the 1970s, they have been undergoing major transformations as a result of globalisation and growing competitive pressure from emerging economies. Some clusters (e.g. machine tools) have adjusted to these pressures better than others (e.g. textiles), principally by diversifying towards higher value-added market niches whilst building on their traditional competences (i.e. related-variety diversification). Rather than tying incentives to local networks, cluster policies should respond to the changing context by supporting product upgrading and sector diversification and international connections. Individual strategies should be developed tailored to the context of each cluster, recognising the differences among the various types of cluster actors.