This article explores growing concerns behind the potential instrumentalization of participatory design within democratic institutions and city-making projects. Drawing on ethnographic data collected during a participatory urban redevelopment in Sydney, it analyzes the wider political, economic, and cultural dynamics shaping participatory design (PD) in contested urban spaces. As a result, the article reflects on the institutional frameworks that challenged the democratic claims of PD, analyzing three interdependent levels of institutional constraints: ideology, governance, and narratives. In doing so, the article interrogates the role of expert-led urban governance, of neoliberal ideologies, and the power/knowledge relations in the building of a consensus narrative. Finally, the article concludes by highlighting the contingency of the so-called constraints, exploring an alternative conceptualization of institutions as social relations. Following this approach, designers may challenge constraints and simultaneously work with, against, and beyond institutions.