Many governments, the university sector and the European Commission have all recognised that increasing university autonomy represents a crucial step towards modernising higher education in the 21st century. However, the study “University Autonomy in Europe I”, conducted by the European University Association in 2009, highlights that, in practice, public authorities still play too central a role in the regulation of higher education systems. Despite the fact that public authorities in a number of European countries have moved away from direct state control towards more “indirect” steering mechanisms, universities often continue to lack autonomy in many crucial areas, particularly in terms of managing their finances. The paper analyses each dimension of university autonomy and ends with some key recommendations in order to enable institutions to make full use of their potential.