PIP: Most aid for health in developing countries is invested into projects, with each project separately developed and negotiated between the donor and the national authorities involved with implementation. Projects, however, can lead to fragmentation and duplication of effort, especially if many donors are involved. Rather than choosing individual projects, international agencies employing sector-wide approaches to development assistance contribute to the funding of the entire health sector. In exchange for giving up the right to choose projects according to their own priorities, donors gain a say in the development of national health policies and in decisions about how both external and domestic resources are allocated. Experiences with sector-wide approaches in Zambia, Ghana, Pakistan, Bangladesh, and other countries are described. A new approach to development cooperation can yield considerable rewards as well as risks; those emerging challenges and concerns are discussed. While common principles are clear, sector-wide approaches in practice are far from uniform. The movement away from projects toward more effective forms of partnership will require accommodation, compromise, and sensitivity to the political forces influencing national governments and international agencies.