Local governments are not sovereign unlike independent nation-states. It is a subordinate government, which derives its existence and power from law enacted by a superior government. The nature and structure of transactions or interactions between the three tiers of government determine the degree of autonomy. Local government in Nigeria is rooted on historical antecedents of reforms. The objective of the study is to show that the unwillingness of most state governments to adhere to the constitutional provisions on establishing democratically elected, freestanding councils is a fundamental problem about defining Nigeria’s federalism. This study examines the contradictions in local government system and suggests that the sustainability of local government autonomy should anchor on improved revenue base adherence to constitutional provisions, political stability, accountability and transparency in governance. Materials for this study have been drawn mainly from secondary sources found in libraries and archives in Nigeria; academic and other resources available in the internet, local and international publications (books and learned journals). The strategy of content analysis was used to systematically analyses secondary data in view of the historical cum contemporary nature of the study. It then concludes with suggestions for possible solution.