The issue of decriminalizing illicit drugs is hotly debated, but is rarely subject to evidence-based analysis. This paper examines the case of Portugal, a nation that decriminalized the use and possession of all illicit drugs on July 1, 2001. Drawing upon independent evaluations and interviews conducted with 13 key stakeholders in 2007 and 2009, it critically analyzes the criminal justice and health impacts against trends from neighboring Spain and Italy. It concludes that contrary to predictions, the Portuguese decriminalization did not lead to major increases in drug use. Indeed, evidence indicates reductions in problematic use, drug-related harms, and criminal justice overcrowding. The article discusses these developments in the context of drug law debates and criminological discussions on late modern governance. (Published Abstract) Tables, figures, and references