A remarkable convergence of political developments produced a major change in the U.S. welfare system in 1996; the Personal Responsibility and Work Opportunity Reconciliation Act. This article reviews recent welfare policy history in the United States, surveys the major issues in welfare reform, outlines Democratic and Republican proposals, and summarizes the new legislation. It is argued that the new initiative will increase the hardship experienced by the poor over at least the next few years. The act's changes in federal funding for public assistance plus state responses to new fiscal incentives the legislation creates are likely over time to increase, rather than reduce, the federal role in welfare finance, if not administration. The new welfare system presents an administrative and political challenge to governors and indirectly to political leadership in the nation's cities. Despite reduced federal regulation of public assistance, the federal government still has an important role in program evaluations.