Public efforts to address the sustainable development challenge in Chilean coastal zone led to promulgation of the National Policy for Coastal Zone Use (NPCZU) in 1995. A main goal of this policy is to support the sustainable use of the coastal zone in Chile by means of a coastal zoning process. In this work we analyze the NPCZU as an instrument for sustainable development of Chilean coastal zone in the context of operational guidelines developed and proposed by different organizations in the past two decades. We present a case study corresponding to the first regional process of coastal zoning plan (CZP) conducted in Chile, we discuss its interaction and consistence with our environmental institutions.  Finally we discuss its potential contribution to achieving a sustainable development of the inhabitants of the Northwest Patagonian Fjords, in a natural setting that offers abundant resources for economic development and that also has the lowest national competitiveness index for local development.   The Chilean government in 1994 enacted its National Policy for the Use of the Coastal Fringe (NPUCF) to promote sustainable development within the context of international requirements. One of the main NPUCF goals was to promote the harmonious coastal development by zoning of these coastal areas for defined uses. In this study, the first zoning process in Chile is discussed, which took place in the fjords and channels of Patagonia Aysén region. Its potential contribution to sustainable development is discussed using an integrated management that includes the physical, biological and social dimensions. The potential contribution of the zoning process to achieve sustainable development is threatened by significant gaps in areas of fairness, competitiveness and governance, which have to be diminished. The natural wealth of this region, abundant in resources for economic growth and human development, strongly contrast with one of the lowest rates of national competitiveness for local development.