The paper provides an analysis of Danida (Danish International Development Assistance) policies in the field of poverty reduction. Current Danish aid efforts to address poverty issues are based on a long-established understanding among policy-makers and aid bureaucrats that a basic premise of Danish aid has been its focus on alleviating poverty. The paper argues that the lack of a more explicit and operational poverty focus throughout the last two decades has placed important constraints on the effectiveness of past poverty reduction efforts. Thus, Danish aid displays both specific results at the level of individual interventions and 'missed opportunities' in terms of failing to address a number of institutional and structural constraints on poverty reduction. Recent important advances in Danida's approach to poverty reduction are acknowledged. Nevertheless, the paper also points to a number of critical challenges and constraints related to further implementation of the new policy framework. These include institutional constraints in Danida's organisation, constraints in rooting poverty reduction efforts in recipient strategies, and the critical importance of interaction between Danida and the wider Danish aid policy community.