Although transdisciplinarity has taken hold in many areas, it is still a concept in its early stages of development in Latin America. We see an emergent opportunity to contribute to the current discussion on transdisciplinarity and its institutionalization at universities. Our specific interest in this paper is to disentangle the conditions under which transdisciplinarity is developed in Latin American contexts and how it can be better implemented within those contexts. Our study focuses on the context of "Latin American Public Universities." We examine the following research questions: (1) How is transdisciplinarity conceptualized in university policy and what are the conditions for its institutionalization? (2) What lessons can be drawn more broadly from the role of university policy in the process of institutionalizing transdisciplinarity? To address these questions, we take the Universidad de Chile as a case study and apply a qualitative methodology of content analysis of university policy documents in the period 2006-2021. Grounded on empirical data, we elaborate on the concept of "situated transdisciplinarity" that emerges from the interplay between practices and policy at the Universidad de Chile and serves as a tool for future institutionalizing processes. We conclude that the concept of "situated transdisciplinarity" can orient transdisciplinary research policy, by problematizing discourses and perceptions.