The question whether political conflict affects the course and outcomes of policy implementation is debated among scholars in public administration. Whereas some scholars emphasize the mediating effects of procedures for political control of bureaucracy, other scholars highlight the actions and preferences of agencies. The present study combines both perspectives and argues that policy divergence is explained by political conflict in interaction with agency preferences. Political conflict is specified in conjunction with the decision-making context. Conflict among decisive legislators—rather than the legislature as a whole—is hypothesized to reinforce the effect of agency preferences on policy divergence. Using a cross-classified multilevel design, data on local policy making and implementation in the Netherlands offer support for these hypotheses and reveal that preferences of agencies and conflict among decisive legislators should be included in explanations for policy divergences in the implementation process.