The roles and structure of government defence research establishments are being redefined in several European countries. So far, large-scale government controlled defence research establishments have played a key function in the development of technological capabilities in the defence field. These organisations are now facing downsizing drives as well as attempts at injecting a commercial logic into their operations. As a consequence their relationships with government defence agencies and defence industrial suppliers are changing. This paper analyses these changes with special reference to the British case, and explores their potential implications for European research policy.