Regional inequality represents one of the key challenges in numerous countries, especially in those where there are economic, social, and infrastructural disparities between different parts of the country. Local economic development can play a significant role in reducing these inequalities. The key role in this process is held by local government, which is best acquainted with the needs and opportunities within its community and is therefore in a direct position to support the development of the local economy. Local economic development depends on a combination of various factors and the effectiveness of policies that can create favorable conditions for economic growth and development. Bearing in mind the above, the aim of this chapter is to examine how local economic development can contribute to the reduction of regional inequalities, with particular attention to the key factors of local economic development and the role of local governments in mitigating regional disparities. The chapter highlights that quality infrastructure, human capital, investments, natural resources, innovation, and technology are key drivers of development for both the national economy and the local communities within it. Local governments can contribute to reducing regional disparities through targeted policies that strengthen economic cohesion between different regions within a country, improving the overall quality of life and economic opportunities for all citizens. Considering the complexity of the mentioned issue, the chapter employs a qualitative methodology based on the predominant application of analytical description methods.