This paper discusses community exchange programmes as a powerful mechanism for increasing the capacity of community organisations to participate in urban development. By enabling communities to share and explore local knowledge created through livelihood struggles, a powerful process is triggered, whereby community exchanges transform development. Through a cumulative process of learning, sharing and collective action, strong sustained and mobilised networks of communities emerge. Central to this has been the sharing of experiences between communities, first at very local levels, then in the city, then nationally and internationally. The development of this methodology by the National Slum Dwellers Association, SPARC (an NGO) and Mahila Milan (a federation of women's cooperatives) in India is described. Exchanges are located within a broader approach to community learning and people's empowerment. Benefits of the exchange process are examined, and the paper reflects on why exchanges are an effective methodology for supporting a process of people-centred development. The necessary conditions for the exchange process to be fully effective are reviewed, which consequently point to the distinct characteristics of the exchange process vis-Ó-vis other participation methodology. It concludes by drawing together some of the wider implications of this approach.