Due to the tremendous growth of information technology, economic globalization and development and the increasing role of the third sector and civil society organizations, the innovation of public governance in developing countries can be considered an important policy issue in meeting the challenges of the 21st century. This chapter attempts to explain the major innovations in local governance during the various successive regimes in Bangladesh since 1971. Two major aspects of democratic local governance and good governance, such as decentralization and people's participation, have been examined in a descriptive and analytical manner. It has been found that despite many past reforms, decentralization of local governance and people's participation in local development have not taken place due to lack of political and bureaucratic will, the patron-client relationship, massive corruption, institutional incapability and conflicting political culture of the country. As a result, local governance institutions became a meeting place of the elites rather than of the local people and corruption remained endemic.