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This article contributes to the debate about urban governance in specialized European cities, by focusing on the interplay between changes in national defence policies and local initiatives. It is based upon qualitative research carried out in Toulon, a mid-sized French city and the biggest military port on the Mediterranean Sea. Firstly, it explains how the emergence of a new urban agenda aimed at diversifying the city from its military function challenged existing relations between the city and the Navy. As a consequence, new areas of conflict and cooperation can be observed. Secondly, it shows how political strategies adopted by elected officials respond to the need to legitimize the new agenda and to constrain the Navy to participate in it, while managing the military constituency. Despite a political discourse that proclaimed convergence of interest between the city and the Navy, the existence of a major conflict concerning the use and control of space doomed the partnership to a (partial) failure. [ABSTRACT FROM PUBLISHER]