The paper analyses the impact of the European Neighbourhood Policy (ENP) on good governance in the partner states. The European Neighbourhood Policy constitutes one of the most recent and innovative foreign policy tools of the European Union and the promotion of good governance lies at the heart of this new framework. The findings of this paper suggest that the influence of the European Neighbourhood Policy in triggering governance reforms has been limited. Since the formal launch of the policy in 2004, both quantitative and qualitative assessments produced by organisations such as the World Bank, Freedom House and Global Integrity show that improvements have been absent in most of the partner states. Moreover, it is shown that in those states showing signs of progress, domestic rather than EU influence has been the main driving force behind reforms. The paper argues that the absence of impact can be explained by several factors, (1) conflicting interest of the EU in the neighbourhood; (2) a mere replication of accession policies; (3) lack of sufficient incentive structures; (4) inadequate involvement of civil society and (5) too much reliance on front-loaded aid. The paper suggests that incentive structures, monitoring and the involvement of civil society are the most pressing issues that need reconsideration to increase the effectiveness of the European Neighbourhood Policy in promoting governance reforms.