Based on a study of regulatory legal acts and doctrinal sources, the article examines the institutionalization of assessing the effectiveness of local self-government bodies as a tool for determining the effectiveness of municipalities in addressing local issues, as well as the analysis of the methodology for conducting such assessments, which revealed the shortcomings of the legal regulation of this institution. Based on the obtained data, the article proposes measures to improve the system of indicators and ways to eliminate the existing shortcomings.