Uganda has been pursuing a major decentralization program since the late 1980s. A highly centralized state is gradually turning into a decentralized one following the transfer of powers, functions and services from central government to local councils. Decentralization is expected to contribute to development by empowering the people and institutions at every level of society including public, private and civic institutions; improving access to basic services; increasing people’s participation in decision-making; assisting in developing people’s capacities; and enhancing government’s responsiveness, transparency and accountability. For these reasons, decentralization is providing the framework within which Uganda is implementing its Poverty Eradication Action Plan. The first part of this paper examines the rationale and characteristics of Uganda’s decentralization. The sections that follow focus on the legal framework, the local government structure and how the policy of decentralization is leading to improvements in service delivery. The last section of the paper is a conclusion.