European integration has increased to encompass security-related policies. One such policy is defense industry policy, which traditionally has been a national concern rooted in defense and security policy. Efforts have been made since the 1990s to create a European defense industry market. However, there have been different ideas of how this goal should be achieved or which model for state--industry relations the market should rest on. Using Sweden to illustrate the development, this article argues that for the Europeanization of defense industry policy, marketization has played a vital role. Building on official documents and interviews, the article analyzes the efforts to create a European defense industry market, marketization of Swedish defense industry policy, and the increased interaction between Swedish and European defense industry policy processes. The analysis also shows domestic challenges that the processes of Europeanization and marketization have brought about. (Contains 3 notes.)