This paper aims to provide a closer overview of the development of local self-government in the Republic of Croatia with reference to European examples as well. The introductory section sets the objective to analyze the development and reforms of local self-government and to highlight key changes throught history, starting from the Middle Ages to modern decentralization processes. The paper provides and overview of the history of local self-government in Europe, emphasizing the medieval communes that had significant autonomy witihin feudal systems. Decentralization allowed local units to make decisions autonomously, marking the beginning of organized local self-government. The European Charter of Local Self-Government sets a framework for protecting local autonomy, and Croatia ratified this document in 1997., comitting to align with the standards of decentralization and srengthening local self-government in Croatia which has undergone significant changes following the disintegration of the state of Yugoslavia and the attainment of independence. The paper also analyzes the financing of local self- government, highlighting the importance of own revenues, taxes and transfers from the state budget as a key sources of financial sustainabilitiy for local units.