Portugal's tertiary education sector has expanded significantly over the last 20 years, but participation and overall educational attainment levels remain below European standards and enrolment rates have begun to decline. The OECD review recommends that Portugal's national government should focus on strategic direction and leave higher education institutions wider latitude for accomplishing public priorities consistent with their mission. Among its proposals for reform, the review calls for the creation of a National Council on Higher Education to oversee Portugal's higher education strategy. The review also calls for major changes in the governance and management of higher education institutions to bring them into line with national goals, encourage their responsiveness and efficiency, and improve their quality. Improving research and innovation is a key strategic objective of the Portuguese government, and the OECD review suggests a number of qualitative changes in Portugal's tertiary education system to enhance performance in this area. Following an Executive Summary, seven chapters include: (1) Introduction and Context; (2) System Diversity and System Co-ordination; (3) Institutional Governance; (4) Educational Programmes: Access, Quality, and Relevance; (5) Research, Innovation and Internationalisation; (6) Financing Tertiary Education; and (7) Conclusions. Six annexes area included: (1) Schedule of Visit 15-26 May 2007; (2) List of Submissions; (3) History of Governance; (4) Income-Contingent Loans; (5) Terms of Reference for the OECD Team; and (6) List of Acronyms. (References are included. Contains 8 charts and 22 tables.)