This second report of a two-part series looks at the peace-building function at USAID. It examines the evolution of reconstruction and stabilization (R&S) in the Bush administration’s foreign assistance strategy and describes the effort to integrate the State Department-USAID budget process for foreign operations, including peace building. It then examines the organizational architecture for dealing with conflict, as it has evolved in the Bureau of Democracy, Conflict, and Humanitarian Assistance. The examination focuses on the creation of the Office of Transition Assistance and the Office of Conflict Management and Mitigation, but also delineates the role of other offices more tangentially concerned with R&S. It then reviews the work of USAID’s geographic bureaus in responding to conflict. It ends with recommendations for reform.