Nepalʼs 2015 federal constitution empowers local governments with significant autonomy, power, and resources for local policymaking, developmental programs, and public services. This research examines this new landscape of local governance as experienced during the first electoral tenure from 2017 to 2022, exploring the quality of local democracy in Nepal. Designed as interpretive research and analysed through a set of participatory democracy frameworks, the findings uncover mixed progress in the capacity of local democratic institutions to utilise constitutionally guaranteed power and resources. The findings of this study offer fresh academic and professional insights on Nepalʼs local democracy, participatory governance, and federalism.