Traditional explanations of the origins of regional parties as the products of regionally-based social cleavages cannot fully account for the variation in regional party strength both within and across countries. This unexplained variance can be explained, however, by looking at institutions, and in particular, political decentralization. This argument is tested with a statistical analysis of thirty-seven democracies around the world from 1945 to 2002. The analysis shows that political decentralization increases the strength of regional parties in national legislatures, independent of the strength of regional cleavages, as well as of various features of a country's political system, such as fiscal decentralization, presidentialism, electoral proportionality, cross-regional voting laws and the sequencing of executive and legislative elections.