The past decade has witnessed profound transformations in subnational territories engendered by a dramatic increase in natural resource extraction. Research to date has concentrated largely on why the transfer of extractive revenues often reinforces a ‘local resource curse’; however, little work has been done on subnational governments’ attempts to maximize the benefits and minimize the costs of mining expansion. Drawing on the literature on subnational governance in the context of resource extraction and neoliberal reforms, this study analyses the strategies–confrontational or collaborative–subnational political leaders pursue and the reasons why they pursue them. The findings are based on in-depth field research in two Peruvian subnational regions that are highly dependent on mineral extraction. More specifically, we examine the collaborative strategy pursued in one region and compare it with a confrontational strategy in another. Our analysis indicates that an interplay between institutional capacity and supporting coalitions affects whether subnational leaders undertake a collaborative or a confrontational approach. Based on our findings, we consider the likely effects of these strategies for regional development. By shifting the focus to the agency of subnational leaders, we make an essential contribution to debates about subnational governance in the realm of resource extraction.