At present, the nature and scope of paradiplomacy vary depending on the level of political activeness of the regions, local challenges and the willingness of both states and sub-national entities to implement paradiplomacy strategies. Latin America, taken as an object of study, is no exception. Over the past three decades, Latin America has gained considerable experience of interaction at the level of cities and sub-national regions. The aim of the research is to identify the key features and problems that shape the development of paradiplomacy in South America, using Mercociudades (Mercocities) as an example. This network includes cities of MERCOSUR member states, while remaining open to other cities. Mercociudades might be regarded as the largest and most influential actor of that nature, whose aim is to develop regional units. Relying on case study, document analysis, comparative analysis and SWOT technique, the authors reveal some problems of institutional and organizational nature, differences in legal frameworks of different actors and irrelevance of separate Mercociudades projects and structures for tackling common challenges. Many of the shortcomings of Mercociudades lie in the very nature of the network, determined by its structure and the policies of MERCOSUR member states. At the same time, it is argued that the Mercociudades network can be considered one of the most advanced paradiplomacy cases. Its experience is relatively successful, contributing to the economic, social and political development of the member cities and states concerned. The research is based on official documents and respectful academic sources.