This article contributes to the ongoing debate on the role of university research for innovation and economic growth, a debate highly influenced by concepts such as Mode 2 and regional innovation systems and clusters. A prominent trend in many EU and OECD countries is to direct research funding towards so-called Centres of Excellence (CoEs) in order to stimulate the industrial output of scientific research. The implementation of the CoE approach is viewed as an attempt to bridge research and innovation policy. By using Sweden as an example and providing an overview and critical discussion concerning Swedish research policy during the period 2001 to 2007 we show that the rhetoric within research policy has changed and become increasingly intertwined with innovation policy. In practice, however, this is not as evident. The study draws on (a) an analysis of policy literature pointing out regulatory and organizational changes concerning the increasing emphasis on linking research to competitive industrial milieus, and (b) a comprehensive database including 110 CoEs, presenting a detailed picture of university-industry collaboration, cross-disciplinarity, and prioritized sectors. We find that the CoEs account for a relatively small share of government funding, but may however have a strengthening impact on particular research milieus and industries, especially in the life sciences. Additionally, although contemporary policy rhetoric appears to highlight steering funding to geographically-concentrated milieus, thereby linking leading university research to regional industrial clusters, this has only been manifested in a few cases -notably in the Vinnväxt programme run by Vinnova, the national agency promoting innovation systems.