International efforts to improve the quality of local or municipal-level governance in developing societies often produce mixed results. In this article, the authors draw on new institutionalism to argue that the impact of international assistance for better local governance in Bosnia-Herzegovina is shaped by the opportunities for local leaders to form pro-reform pacts (Goetz 2007) and by interaction with locally distinct, informal “rules-in-use” (Ostrom, 1999) in local administrations. The authors test the argument against original data collected in 2005 and 2010 in six randomly selected similar municipalities across Bosnia-Herzegovina, focusing on three pairwise comparisons. Interview testimony; official documents; observation of public hearings and service provision; and FOIA tests provide data on independent variables and the dependent variable, a multidimensional index of local government performance that the authors formulated. Analysis suggests that local leaders who have formed pacts with politicians, social groups, and business leaders with a shared interest in well-performing local governments are more likely to build momentum that helps them change local “rule-in-use” to support reforms and ultimately improve local government performance. Without supportive “rules-in use” in local administrations, the rules promoted by international donors to improve local government performance remain only on paper.