This paper presents changes that have occurred at the local level in Poland and new German federal states during the process of the post-communist system transformation. The stages of rebuilding the local self-government and its structures are analyzed. The experiences of Poland and Eastern Germany – two states where the system transformation took different courses – were compared. At the same time, both countries have different constitutional orders of the unitary state and federal state, and this context are interesting fields for a comparative analysis. This paper also confronts the two methods of institution building – the importing of well-established institutions and developing them in the evolutionary way, where in both cases path a dependency can be well observed. In Germany this is considered a special case (Sonderfall) of institutional transformation, in which the key role was played by the transference of institutions, personnel and financial means. This was also done much quicker and in a more structured and comprehensive way than in Poland. In the case of Poland, the creation of local self-government structures or shaping the political actors was a grassroots and evolutionary process. This article points out the most important factors that had a crucial significance in the course and results of the transformation and explains different ways of developing the system of democratic local self-government.