The paper discusses participatory budgeting as one of the institutions of direct democracy and a form of co-decision of residents in the process of spending public funds at the disposal of local government units. Its essence is the activation of citizens, building trust and cooperation between the authorities and the inhabitants, as well as the implementation of the principles of equality and social justice. The significance of the participatory budgeting as a new form of influence on the decisions of the local government apparatus is not so much about ensuring citizens participation in managing public finances as it is primarily about education and increasing public awareness in the area of democratization of local government. The participatory budgeting in Poland was considered in the view of models of democracy: direct, representative (conventional) and participatory.