The Constitution of the Republic of Croatia, the European Charter on Local Self-Government and the Act on Local Self-Government and Administration (1992) constitute the legal framework for the development of local and regional self-government and their greater independence.

There are 21 units of regional self-government (20 counties and the City of Zagreb, that has both city and county status) and 547 units of local self-government (122 towns and 425 municipalities) in Croatia. In accordance with the process of decentralisation, the new Act on Local and Regional Self Government entered into force in July 2001, aimed at providing local government bodies with enhanced responsibilities. This concerns in particular the affairs related to education, health service, area and urban planning, economic development, environmental protection, traffic infrastructure and culture.

Both regional and local representative bodies are elected by secret ballot, and the executive bodies are established in accordance with the results of the elections. According to the principle of subsidiarity, the central Government is not entitled to interfere in the responsibilities of local and regional authorities.

Local and regional self-government units have the right to their own revenue. The state is under the obligation to assist the financially weaker units of local self-government. In Croatia there are some underdeveloped or smaller local communities where the normal functioning of local bodies and institutions is hampered by the lack of funds.

The right of the local and regional self-government bodies to conclude agreements either among themselves or with corresponding territorial units from abroad, without obligation to request prior approval from the State, is provided by the Constitution and by laws. Thus, a number of various protocols have been signed among Croatian and foreign partners, especially in the field of cross-border cooperation, interregional and inter-municipal co-operation.