The delivery of veterinary services in most developing countries was, until recently, considered to be the responsibility of the public sector. However, over the past four decades, economic constraints and the imposition of structural adjustment policies (SAPs) have led to a gradual decline in public sector investment in real terms and thus a reduction in the quality and quantity of services available to livestock keepers. Many governments acknowledged that they were no longer able to provide services that were essentially of a 'private good' nature and introduced radical policy changes which sought to introduce the concepts of a market orientated approach towards agriculture and livestock production in particular. The role of government, in the future, would be to provide a reduced range of essential 'public good' services and to create a favourable environment in which the private sector could become established as a provider of 'private good' services and at the same time act as a partner in carrying out certain public functions under contract or 'sanitary mandates'. In almost all developing countries, however, these policy changes were not accompanied by appropriate development strategies. The reasons for this are complex. Firstly, SAPs may be considered to have been foisted upon governments by donors and are thus perceived by many policy-makers as the cause of financial problems, rather than a solution to them. Secondly, most animal health senior policy-makers in the public sector have been trained as veterinarians and lack the required management skills to plan change effectively. Furthermore, as regards clinical veterinary service delivery, especially in rural or more remote areas, the solution fostered by donor investment, which involves deregulation and the deployment of privately operating para-professionals, is often perceived as a threat to the veterinary profession and might result in limiting access to international markets for the trade of livestock and livestock products. An informal delivery system has gained a foothold in many developing countries in the absence of a well-planned strategy for the privatisation of animal health services. Most governments would now acknowledge that this presents a greater risk than the deployment of well-regulated and effectively supervised para-professionals. This paper explores some of the principal challenges facing policy-makers in their efforts to bridge the transition from full state provision of animal health services to the formation of a partnership with the private sector. Governments and donors need to take active steps to facilitate the process of privatisation of animal health services, especially those targeting the poorer rural subsistence and pastoralist farming systems. This would entail an initial investment in developing the necessary management skills at all levels in the delivery system. Thereafter, further investment would be required to allow the changes to be managed using tools such as the strategic planning cycle. Should sufficient resources be made available to allow the full participation of all stakeholders in the delivery of animal health services, appropriate institutions and effective organisational relationships addressing all the more important issues will have to be identified. The paper then proceeds to describe how different livestock production systems determine the level of demand for animal health services. If these services are to be provided on a financially sustainable basis, they must be tailored to meet actual rather than perceived demand. Identifying an appropriate model for animal health service delivery thus requires careful analysis of the production system to be targeted. Governments and donors can play a useful role in providing resources for this type of study as well as for appropriate market studies, business planning, training and access to soft loans. Finally, as regards regulation, as the law stands today, many activities currently practised by para-professionals are classified as 'acts of veterinary medicine or surgery' and may only legally be performed by qualified and registered veterinarians. The concept of 'principal' and 'subsidiary' legislation provides the necessary flexibility in the regulation of the delivery of animal health services to accommodate the rapid changes taking place in this environment today. Deregulation involves the delegation of responsibility for the performance of a defined range of veterinary interventions to para-professionals under the 'supervision' or 'direction' of a registered veterinarian. The author illustrates how the experiences of a number of projects in Tanzania were used to propose a definition of 'supervision' in law. The definition offers an opportunity to overcome the fear of compromising standards of delivery of animal health services through the deployment of para-professionals. In addition, such functioning provides employment opportunities for private veterinarians in rural areas where access to formal primary animal health services would otherwise be denied and may contribute to the process of quality assurance of national veterinary services in developing countries.