In the past two decades, many Latin American countries incorporated direct‐democracy mechanisms (e.g. initiatives and referendums) into their constitutions. By expanding the room for citizens' political participation, direct democracy was meant to reduce the gap between citizens and government and create a more‐inclusive form of governing, but was it really the case? This article asks, to what extent can citizens use direct democracy to shape public policy in Latin America? It argues that constitutions in Latin America provide an ambiguous basis for the use of referendums and initiatives, which allows governments to shape and limit their use during the agenda‐setting stage. By specifying the limitations on the types of mechanisms used, the issues that cannot be decided via direct democracy, and the barriers to placing mechanisms on the ballot, governments can control the direct democracy process to a greater extent than has heretofore been acknowledged.