The predominant characteristics of decentralization in Latin America condition the exercise and scope of regional and local political power, and therefore the governance practices in subnational units. This article discusses how political, administrative and fiscal aspects of decentralization determine specific features of governance in municipalities and cities. Generally speaking, the greater the degree of decentralization, greater may be the scope of governance in decentralized subnational units. Additionally, examines the implications that the two dominant orientations of decentralization in Latin America: one, with emphasis on economics; and other, with social and democratizing trends, have for governance