Existing explanations of domestic structural change focus on the role crises play in precipitating radical or episodic change. They largely ignore the sources and consequences of incremental change, even though this type of change also can have significant effects for policy processes and outcomes. We outline a framework for studying institutional transformation that accounts for both forms of change. The argument is a three part one. First, international and domestic events, including both crises and gradual pressures, open windows of opportunity that provide policy officials with the potential to transform existing institutions. Large-scale, system-wide changes open large windows, which allow radical change, while small-scale, issue-specific problems and changes create more limited opportunities for change. Secondly, whether an institutional change follows a window of opportunity depends on the actions and interests of state officials. Thirdly, state officials' ability to capitalize on a window of opportunity depends on their institutional position or capacity; the prevailing institutional arrangements create opportunities for, or place limits on, officials' ability to make change. Two case studies illustrate and probe the plausibility of the argument.