In 2005, the State of New Mexico undertook a sweeping transformation of all publicly funded behavioral health services. The reform was intended to enhance the cultural responsiveness and appropriateness of these services. To examine achievement of this objective, we conducted a qualitative study of the involvement of Native Americans in reform efforts and the subsequent impacts of reform on services for Native Americans. We found that the reform was relatively unsuccessful at creating mechanisms for genuine community input or improving behavioral health care for this population. These shortcomings were related to limited understandings of administrators concerning how tribal governments and health care systems operate, and the structural limitations of a managed care system that does not allow flexibility for culturally appropriate utilization review, screening, or treatment. However, interaction between the State and tribes increased, and we conclude that aspects of the reform could be strengthened to achieve more meaningful involvement and service improvements.