Performance agreements in higher education are seen as a promising steering tool in many countries, including Norway. The aims of the performance agreements in Norwegian higher education are to enhance quality and diversity through clearer institutional profiles and better division of labour between institutions. An expert group that carried out an assessment of the funding system recommended the Norwegian Ministry of Education & Research to implement institutional multi-year performance agreements to enhance quality, diversity and cooperation. In 2016-17 the Ministry implemented an incremental process covering initially five plus other five pilot institutions. This article gives an overview of the context, process and framework of performance agreements at the national level as well as how this new steering tool is being handled in one of the pilot institutions. It focuses on the implementation process and is based on qualitative observations and written communication between the Ministry and the pilot institutions. Although, it is still too early to evaluate the results and the impact of performance agreements in Norwegian higher education, the experience so far indicates that it seems to be possible through negotiations between the Ministry and the institutions to strengthen the institutional profile by prioritizing goals and measures. The content in the pilot agreements differ and no obligatory indicators are part of the agreements. The incremental implementation process has limited the discussion on complementarity. Even though actions towards the division of labour between institutions are an important part of some of the agreements, this seems to be a more challenging task than profiling.