Interest in the transformational potential of education has seen development partners prioritise support for basic education. Tertiary education has tended to be considered in narrow and instrumental terms focused on supporting economic growth through vocational education and training. Development partners have largely overlooked the much broader potential of the sector to engage with a wide range of development challenges. This article focuses on the role of national universities as significant development actors. With their broad institutional mandates, national universities have an institutional capacity to engage with complex processes of nation, state and peace-building. These processes are important in explaining the emergence and persistence of conflict in fragile developing country environments, and are particularly challenging for development partners to engage with. Realising the potential of universities as significant national development institutions will require development partners to broaden how they approach tertiary education and provide different forms of institutional support. Drawing on an empirical case study of the establishment of the Solomon Islands National University (SINU) in Solomon Islands, a small island post-conflict fragile state in the south-west Pacific, this article considers: (i) the practical challenges faced in building a national university and realising its potential as a significant development institution; and (ii) the challenges and opportunities for development partner engagement in helping national universities realise such potential.