Competence to work in schools is an important dimension of professional competence, although it is often a neglected dimension of teacher development. This article reports a qualitative study that examined student teachers' learning experiences in initial teacher education (ITE) in relation to competence to work in schools. In-depth interviews were conducted with 12 student teachers on an undergraduate ITE programme in Hong Kong. The findings of the study show that competence to work in schools is characterised by student teachers' deep contextualised learning. In addition, it offers a deeper understanding of this competence in the ITE context by identifying its three facets, namely understanding of the micro-political realities of schools, social capital building and social strategies. The study provides insights for ITE and schools to support student teachers' development of their competence to work in schools, including the design of ITE curricula, ITE processes and co-curricular activities in undergraduate studies. Moreover, it suggests the importance of developing schools as growth-fostering and positive micro-political sites for ITE fieldwork and teacher induction.