Urban local self-governments are the third stratum of government, that are located closer to the citizenry. They have, however, declined due to a variety of reasons such as demographic growth, fragile institutional and fiscal capacity, weak executive system, and the indifferent attitude of higher levels of governments towards their strengthening and empowerment. Though an attempt was made in the early 1990s for their empowerment through an amendment of the Constitution, it could not achieve its avowed objectives because provisions for institution building were diluted and even its mandatory provisions were not implemented. This paper traces the reasons for the decline and suggests several policy steps for their strengthening and refurbishment.