Local governments occupy a critical position in democratic governance as the level of government closest to the people. In decentralized political systems, they are expected to facilitate grassroots development, promote citizen participation, and enhance democratic accountability. However, in many developing countries, particularly Nigeria, local government autonomy remains constrained by institutional and political factors embedded within intergovernmental relations. This study examines the relationship between local government autonomy and intergovernmental relations and its implications for grassroots governance and democratic accountability in Nigeria. The paper adopts Democratic Governance Theory as its analytical framework and employs a qualitative research design based on secondary data sources, including scholarly publications, government documents, and policy reports. The study identifies key constitutional and institutional challenges that undermine local government autonomy, particularly the operation of the State Joint Local Government Account (SJLGA) and the dominance of state governments over local councils. Empirical insights from Rivers and Bayelsa States illustrate how fiscal dependence and political interference weaken grassroots governance despite substantial federal allocations. The findings reveal that although decentralization policies aim to strengthen local governance, weak institutional frameworks and limited fiscal autonomy hinder their effectiveness. The study concludes that strengthening local government autonomy through constitutional reforms, improved fiscal decentralization, and enhanced citizen participation is essential for improving grassroots governance and democratic accountability in Nigeria.