In an effort to support a transition to sustainability, urban institutions now face new challenges. Municipal level institutions design and implement sustainability action plans, climate action plans and increasingly, climate adaption projects. This article reviews the debates surrounding the role of institutions in sustainable urban governance, as well as the tools available to assess the plurality of actors working within and across institutional boundaries. Sustainability as a guiding principle in urban planning requires a fundamental reorientation of the rationalities that have governed discrete aspects of social, economic and political life in cities. Institutions, in ordering the administrative and management activities of urban governments, are critical in efforts to hasten the adoption of sustainability ideals and in the implementation of associated projects. Urban political institutions engage with new forms of environmental leadership and polycentric forms of environmental governance in response to contextually specific urban characteristics and actor constellations. The extent to which sustainability ideals are institutionalized depends on sound analysis that helps form new understandings of the ways in which human‐environment systems are coupled — and how this coupling should inform governance action in support of sustainable urban development.