Objective: Organizational learning, underpinned by evidence-based health care, and greater user involvement in planning and delivery were key objectives of the NHS Plan. Evaluation, and specifically participatory evaluation, offers the potential to address these elements of the NHS modernization agenda. We discuss the strengths and limitations of evaluation in delivering the modernization agenda through use of a case study--the evaluation of a Healthy Living Centre project, "catchon2us!". Setting: A Healthy Living Centre project in Merseyside. Results: There was evidence that collaborative research can promote opportunities which foster significant learning and change, thus making the effort and time involved worthwhile. However, the two-way flow of information necessary for development of shared goals and learning at strategic, as well as provider, levels is not easily achieved. Barriers include the rigidity of organizational structures within large agencies such as the NHS, with priorities imposed from national levels overriding local priorities. Conclusions: The inherent contradictions in current strategic drivers in the NHS need to be addressed if services can ever deliver the goal of true organizational learning. (Contains 1 figure.)