This article theorises and analyses two aspects of government building in the German states while paying special attention to interrelations between the federal and state level. Firstly, we examine which factors influence the choice of the partisan composition of the next government. Secondly, we ask for the determinants of the policy positions of the newly formed coalition governments. Original empirical results show that both government formation and policy formulation in the German Länder are clearly affected by federal politics. State-level coalitions cross-cutting the federal government-opposition divide are avoided, and the strength of this effect depends on institutional context and the federal election cycle. The policy position of state-level governments is affected by the position of the respective federal government. On the economic policy dimension, all state-level governments move towards the federal government. On the social policy dimension, those state governments whose partisan composition is congruent with the federal government seem to move away from the latter.