In Rio de Janeiro, the 1980s’ cocaine boom coincided with the advent of a new form of organized crime—the prison-based Comando Vermelho (CV) drug syndicate and its rivals—to produce unusually concentrated and territorialized retail markets based in the city's numerous favelas (slums). Police institutions built during authoritarian rule delivered both brutal repression and rampant corruption. The result was an increasingly violent but resilient system of illicit rent extraction and escalating repression, punctuated by a handful of locally successful policy experiments. Starting in 2008, a new strategy, Pacification, significantly altered this dynamic, vastly reducing cartel–state conflict. I make three key claims: (1) Between democratization (1983) and Pacification (2008), the degree of repression varied but trended upward, while conditionality remained low. Syndicates responded to unconditional crackdowns with violent, “fight-and-bribe” strategies. (2) The GPAE policing program (2000–2001) raised conditionality locally, leading affected traffickers to eschew anti-state violence until the program eroded and collapsed. (3) The initial implementation of the Pacification strategy (2008–2012) significantly increased the conditionality of repression at a city-wide scale, leading cartels to eschew anti-state violence. I conjecture that Pacification's initial success and rapid expansion led to an erosion of effective conditionality, contributing to a resurgence of violence since 2013. I discuss the reform processes by which GPAE and Pacification were implemented and the difficulties of sustaining them. I also conjecture that Rio's numbers racket (1940s–1980s) was kept relatively peaceful through a moderately conditional approach.