Promoting democracy and strengthening good governance have become core components of post-conflict peace-building initiatives of the United Nations (UN). An often overlooked dimension of the analysis of UN peace support operations has been the crucial role played by the United Nations Development Programme (UNDP) at the critical juncture linking peacekeeping to sustainable development. UN peace operations in Central America over the last decade have pioneered the organisation's involvement in the uncharted territory of post-conflict peace building. UNDP's Central American experience was the first step in the organisation's evolution away from providing traditional development assistance, towards playing an active and openly political role in post-conflict democracy building and governance reform. This new role of the UNDP has had dramatic repercussions on its mandate, administrative structures, corporate policies and operational strategies. The current institutional renewal of UNDP has its roots in its endorsement of democratic governance as essential dimensions of its mandate to promote sustainable human development. This article assesses the significance, promises and dilemmas of the governance agenda for UNDP and analyses the scope, nature and institutionalisation of democracy and governance programmes within UNDP, using Central America as a case study. It argues that the future of UNDP democracy assistance will largely depend on how successful it is at resolving the inherent tensions between democracy promotion and national sovereignty, while retaining its multilateral approach to peace and democracy.