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This thesis explores decentralisation in the context of the emergence of indigenous peasant movements in Bolivia. It examines the Bolivian state territorial reconfiguration through decentralisation, with a focus on the impact the process of municipalisation had on indigenous territoriality and social differentiation within Andean communities. It is argued in this thesis that the scope of the Popular Participation Law proves to be more complex in practice than the aims stated by the promoters of the law and by the associated literature. The thesis shows how the municipalisation in fact comes to play a concomitant role in the neoliberal strategy of land property structure modernisation. It also explores how the incorporation of rural Andean indigenous communities into 'national life' as an element of the neoliberal strategies framed on widening the reach of the market come to affect Andean strategies of space management.