There is an emerging interest within social and policy studies in the potential connections between linguistic practices and broader social processes. It is, however, difficult to find examples of research which take a fully discursive approach to policy analysis. Such a discursive approach might focus on how the use of language in the policy process is involved with social practices, such as the legitimisation of social relations or the construction of ‘knowledge’ of social reality. The article begins by exploring theoretical and methodological issues in relation to connecting micro aspects of language use, such as grammar and lexis, with the social construction of knowledge. It then uses discourse analysis to explore how the linguistic resources of a key British urban policy document, New Life for Urban Scotland, are involved with reproducing and sustaining a particular ‘knowledge’ or discourse about the causes of urban decline.