The study examined decentralization and its impact on local economic development in Nakasongola town council. The major objective of the study was to assess The impact of decentralization on local economic development in Uganda. Decentralization theories include public choice theory, Neo-classical theory, democratic and Marxist theory. Data sources that the researcher used include primary and secondary. Below are the primary sources that the researcher used; Questionnaires, oral interviews, observation and secondary sources included documented materials such as work plan and budgets, annual reports, text books and also news papers. Findings are presented in tables and written forms emerging from questionnaires distributed and other information the researcher established during the study. From the findings it was discovered that the system of Decentralization has promoted local economic development to a lesser extent because of inadequate sources of funding, poor prioritization, lack of transparency and poor administrative skills in making development plans and budgets.