Smuggling is commonly presented as an activity practiced in the ‘shadows’, ‘under the radar of the state’, and fundamentally ungoverned. This paper challenges this conception by examining the institutional governance of informal cross-border trade through informal and hybrid institutions. Based on 14 months of original fieldwork in the borderlands of Tunisia and Morocco, the paper argues that informal cross-border trade (ICBT) across the Maghreb is highly regulated through a dense network of informal institutions that determine the costs of ICBT, the goods that can pass through certain nodes, as well as their quantity. Through these institutions, ICBT has established trading channels that are illegal and yet normalised, and segmented from the routes that contain more illicit goods. The paper highlights key features of these institutions that inform the contemporary literature on informal institutions and hybrid governance. First, it finds state structures deeply involved in the negotiation and maintenance of these institutions, suggesting their role as a deliberate and strategic element of regional economic governance. Second, it finds that informal institutions governing ICBT in the region are commonly impersonal, establishing rule-based interactions between traders and law enforcement agents, rather than mere clientelistic relationships. And third, it finds that the adherence of local populations to these institutions primarily results from local economic strategies, and does not imply congruence with complex local conceptions of legitimacy. Taken together, the analysis of these institutions provides a novel and empirically grounded perspective on the reality of border porosity in the Maghreb.