This chapter focuses on local governance innovation in Thailand. During the past 15 years, decentralization has been implemented in Thailand. Local government in Thailand is increasingly important in providing public services, not only in civil engineering but in social policies as well. Major functions of Thai local governments and the course of decentralization shall be briefly explained. While structural innovation, such as amalgamation or local cooperation, was unsuccessful, monitoring and giving incentives through ‘local government awards’ by central government are widely used. Awards are given to local governments in areas central agencies think significant and want local governments to pay more attention to. In this chapter, the capability of local governments will be analyzed, by using survey data on Thai local government conducted in 2006. Our findings suggest that people's access to local governments plays a significant part in the capability of local governments.