In the last two decades, the concept of plurinationalism has appeared in discussions about nationalism, statehood and multilevel governance, being formulated as a new state model that accommodates cultural diversity within the liberal state with the aim of solving nationalistic conflicts in countries marked by profound ethnic grievances, mainly in Europe. However, these discussions have paid less attention to the meaning of plurinationalism in ex-colonial contexts, particularly in recent experiences of state transformation in Bolivia and Ecuador, where the role of indigenous peoples in the plurinational project has been crucial. To fill this gap, this article explores the legal and political foundations, challenges and local and international dynamics in the building of the plurinational model in both countries. Under a critical engagement with Third World Approaches to International Law (TWAIL), this article argues that plurinationality from indigenous perspectives departs from multicultural liberal models associated with current European plurinational views, and addresses two challenges: a global political economy of resource extraction, and a racialized state structure working as a barrier to actual plurinational implementation. These limitations explain an intrinsic tension in the Bolivian and Ecuadorian experience: on the one hand, plurinational governments try to unify the people around the 'national interest' of developing extractive industries; and on the other hand, they attempt to recognize ethno-political differences that often challenge the transnational exploitation of local resources.