Abstract: This is the second research report by the Indigenous Community Governance Project (ICGP). The ICGP is exploring the nature of Indigenous community governance in Australia—to understand what works, what doesn’t work, and why. The first report, based on 2005 fieldwork, was published as CAEPR Working Paper No. 31/2006. This report brings together findings from the fieldwork conducted during 2006, based on evidence drawn from case studies of Indigenous governance in action within differing community, geographical, cultural and political settings across the nation. It focuses on six major governance issues that have come to the fore in the 2006 research. These are: • the conceptual complexity of ‘communities’ • nodal leadership in Indigenous communities • networked governance and associated Indigenous design principles • cultural legitimacy • governance capacity development, and • the governance capacity of governments. The research data and implications for each of these issues are set out in the six main sections of the report. The report identifies a number of practical program and governance development responses that could meaningfully contribute to addressing current governance gaps and shortfalls identified in the case studies. If adopted, these recommendations should result in improved and more sustainable outcomes in Indigenous governance at the local level.