While most of the quantitative literature on quality of government has focused on national differences, subnational variation has been neglected, mainly due to the lack of data. This study explores subnational divergences in quality of government (understood as control of corruption, impartial treatment of citizens, and government effectiveness) using newly created subnational data including over 70 European regions. It addresses the institutional puzzle of why regions which share so many formal institutions (e.g., Northern and Southern Italy) do diverge so much in quality of government. Similar to recent political economy scholarship, our theory points to historical path dependencies. The study argues that a major factor explaining regional path dependencies is the consolidation of clientelistic networks in those regions where rulers have historically (seventeenth to nineteenth centuries) less constraints to their decisions.