The current decentralization in Uganda originated in the late 1980s as part of a broader effort to restore state credibility and deepen democracy following several years of political and economic turmoil. Using a detailed legal framework Uganda entrenched political, administrative and fiscal decentralization as a strategy for broad-based growth with poverty reduction. in this paper we review Uganda's decentralization with the objective of highlighting several issues including empowerment of local leaders and residents, experience with local elite capture, improvement of service delivery, promotion of real sector response to improved economic environment, and enhancement of progress towards the MDGs. Our review of the achievements and challenges of Uganda's decentralization illustrates the much discussed issue on the literature that there are levels of decentralization that are consistent with certain levels of economic and democratic development.