This article examines how Oxfam came to forge an exceptionally close relationship with the Tanzanian state during the 1960s and 1970s. Oxfam, an organization that sought in this period to build and strengthen grassroots participation in development planning and implementation, participated in a development programme in Tanzania that, during the 1970s, actually withdrew power from the peasantry. The government shifted ever more towards an authoritarian position, and forced the relocation of upwards of six million people into newly established villages. Yet Oxfam seemingly was blind to the realities of what was going on, maintaining throughout this period that the development programme was oriented towards the creation of communal production and grassroots democracy — Oxfam's definition of Ujamaa. The article argues that Oxfam came to this position through its involvement in a rural development project in southern Tanzania in the 1960s. The Ruvuma Development Association became, for Oxfam, its touchstone for interpreting and defining what Ujamaa meant. Having erected a prism through which to understand Tanzanian development, Oxfam failed to perceive the growing divergence between the state and itself in objectives and strategy in the implementation of a rural development strategy.