Competing claims of authority and persistent instability have had a profound impact on national politics in Libya. Yet despite national fragmentation, efforts to empower local governance bodies through a process of decentralization could contribute to what will be a long-term process of rebuilding the Libyan state. In the absence of capable and unified national institutions, local authorities, primarily municipal councils, have emerged as among the most trusted governing bodies in Libya. Such reliance on local solutions to national problems should not be interpreted as a rejection of the national state but rather a rejection of the centralized state. The challenge facing Libya’s political elites is how to accommodate this trend while acknowledging the long-term necessity of an efficient national state capable of managing and redistributing national resources and overseeing a responsible system of local governance. While this chapter argues that tangible progress toward decentralization could play a major role contributing to the stabilization of Libya, it recognizes that local processes are likely to remain that way – localized rather than systematic – absent a unified national stabilization effort that can integrate small-scale successes into a comprehensive political agreement. For all its promise, local governance alone cannot carry the burden of stabilization in Libya.