This article analyzes the interaction between stakeholders in the clean development mechanism (CDM) in Brazil and assesses the impacts this market mechanism has had on institutions and on the climate change policy discourse in Brazil. Brazil ranks as the third largest host country for CDM projects, even though it has maintained a strong commitment to the environmental integrity of the CDM system. Despite its positive experience with the CDM, the government is opposing the inclusion of tradable carbon credits for reduced deforestation in the post-2012 climate regime. The main benefits of the CDM for Brazil have been its contribution to diversifying the energy system and to creating human and institutional capacity for carbon governance. These are important assets as Brazil develops its own national policies to tackle climate change.