Agencifi cation, or the carving out of independent agencies from the government, is a New Public Management (NPM) approach for restructuring government through separating the policy formulation and policy implementation functions. This research empirically investigates agencifi cation in the public health system of the State of Rajasthan in India, with reference to the rationale for agencifi cation, composition of agencies, autonomy and control of agencies, and service delivery by agencies. This research employs organisation theory perspectives such as interorganisational relations to explicate mechanisms for achieving functional integration and coordination between agencies and parent departments.