Canada's province of Ontario introduced a new policy in 2000 allowing community colleges to offer a new type of undergraduate degree. This decision was a significant policy change for the government considering the nature of Ontario's binary system, where a rigid separation has historically prevailed between the university and college sectors. Drawing on multiple sources of data, this study indicates that the decision to create a new type of applied bachelor's degree generated a series of uncertainties and challenges for higher education institutions, students and government agencies. The paper highlights the need for policy makers to consider the socio-cultural aspects of higher education systems in policy design, particularly the role of legitimacy. (Contains 1 table and 1 figure.)