The entry of the ANC into the arena of democratic politics provoked a dilemma for the party leadership that is familiar to political parties in a new democracy: how, if at all, should the party reform its internal organization to compete in a new electoral environment? This article draws on interviews with senior members of the ANC to develop a theory that describes how the ‘modernization’ of the ANC under President Thabo Mbeki led to his electoral defeat at the party's national conference in 2007. It contends that the process of modernization reduced systematically the role of the party's activist base in the policy-making process, creating a motive to replace the President, but left intact the role of activists in the selection of the party's leadership, which in turn provided an opportunity to replace the President at the party's national conference. The President's opponents exploited ruthlessly this opportunity by enlarging and mobilizing the party membership, using a clientelistic appeal for support, to deliver a resounding victory for their champion, Jacob Zuma. This type of clientelistic competition, which has become routine inside the ANC, undermined the democratic legitimacy of the party and its capacity to govern in the public interest.