The paper analyses main dimensions and consequences of deregulation in the Danish construction industry. Previous research has often conceptualized deregulation in terms of either the dismantling of states’ regulatory capacity or the layering of initiatives upon existing structures. Using Foucault’s concept of governmentality, we contribute further to this discussion by conceptualizing the process of deregulation as a socio-spatial transformation. This is a complex process of transformative change involving the opening and reconfiguration of institutional spaces. Drawing on an analysis of historical and current developments and changing modes of construction governance in Denmark, we show how the construction sector in the 1940–1960s was rendered governable by disciplinary power in order to achieve national modernization. We then illustrate how the developments since the early 1990s have been moulded in a neoliberal governmentality, with a focus on deregulation and the establishment of free markets. On the basis, we discuss the consequences of a shift in governmentalities, suggesting that new deliberative spaces in the form of mediating and interstitial institutions are likely to be in demand for in order to transgress the bounds of neoliberalism and ensure commitment for alternative development agendas.