While there is broad scholarly agreement that policy-making in the European Union (EU) involves a multitude of public and private actors at different levels of government, there is less agreement whether the EU should be conceptualized as a form of governance by networks or governance in networks. This article first examines different concepts of networks. It then sets out multiple functions of networks within the EU policy process. Particular attention is paid to the extent to which networks may provide added value to European integration and improve the quality of governance by effectively solving common problems and helping to address the democratic deficit or whether, by acting as mechanisms of exclusion rather than inclusion, they actually contribute to the EU's legitimacy deficit. Since networks can enhance governance quality as well as undermine its democratic credentials, a balance sheet shows both positive and negative consequences.