Tertiary education systems promote growth and well-being by providing the high level of skills and research output required in modern economies. Available evidence suggests, however, that Italian higher education learning outcomes lag behind international standards and that the benefits of university scientific output are not spread widely to society. This chapter argues that key reforms, in particular of university governance and funding, would contribute to a better performance of the higher education system. Making universities both more autonomous and more accountable would stimulate their performance. Better management of human resources, including performance-based careers and remuneration and improved recruitment processes, would also help. The new University Reform Act builds on principles which are in line with some of these recommendations. It will be important that the forthcoming secondary legislation translate these principles in effective operational rules and that regulation is then effectively implemented. Greater participation of private-sector funding could increase efficiency, both by expanding financing and providing clearer signals on the quality of education and research. The last section examines how universities could better contribute to advancing scientific knowledge and spreading new technologies throughout the economy.