This article discusses the trends and limits of the Brazilian health system decentralization process, identifying the three elements that constitute the strategic induction performed by the national system administrator in accordance with the guidelines contained in the Operational Norms of the Unified National Health System: systemic rationality, intergovernmental and service provider financing, and health care model. The effects of the Federal regulations are analyzed based on the results of the evaluation study focused on the implementation of the full management scheme at the Municipal level. The decentralization strategy induced by Basic Operational Norm 96 has succeeded in improving institutional conditions, management autonomy, and supply, as measured by the Federal resources transferred, installed capacity, production, and coverage of outpatient and hospital services, with the Municipalities authorized to conduct fully autonomous management, without altering the existing patterns of inequity in the distribution of funds to poorer Municipalities.