Federalism is widely lauded for its ability to manage deep social divisions and promote efficient policy in democratic systems, but it has been criticized for its impact on party system nationalization. In this paper, we explore the role of formal and informal institutions on party system nationalization in the Mexican political system, focusing on legislative politics. In Mexico, an end of one-party rule transformed the nature of center–periphery relations, empowering subnational actors and giving them incentives to act on the national stage. Using an original dataset, we show that these changes resulted in national parties dividing along state lines on policy decisions, and that the magnitude of these divisions depends primarily on 1) the informal centralization of career resources, 2) the extent to which parties are ideological and programmatic, and 3) the personal vote incentives of electoral rules.