This research has been conducted to identify the challenges that hinder applying decentralization in local units of rural Minya Governorate. In addition, the study defines different types of local administration systems in Egypt in terms of the problems they face and mechanisms to overcome such problems. Moreover, the study analyzes various dimensions of decentralization and distinguishes between advantages and disadvantages of its application. The study has applied the descriptive analytical research method. A sample of 60 respondents was randomly chosen from six village local units of Minya       Governorate. Respondents of study are heads and/or associates of village local units. The statistical analysis of data has been processed using SPSS. Percentages and frequencies have been used for descriptive analysis. Mann-Whitney test has also been used to check the significance differences between those who tend to accept decentralization and those who want centralization. Pearson simple correlation coefficient and Step-wise analysis were used to explain the discrepancy in the three investigated aspects of decentralization. Followings are the important findings of study: 1. The percentage of respondents who prefer the decentralized management system at village local unit is 41.7% against 58.3 percent prefer centralization. 2. The most majority of respondents (91.7%) prefer the decentralized strategy of village local units. 3. Financial decentralization of village local units is the preferred option by 58.3% of total respondents. 4. Using the Mann-Whitney test shows statistically significant differences at 0.01 level between those who want to apply centralization and those who tend to decentralization of the respondents in terms of management strategy and financial affairs of village local units. It is concluded that the heads of village local units and associates prefer decentralization both in terms of the development of the local unit strategy and management of financial affairs while more than half of them prefer centralization in local administration. Using Pearson simple correlation coefficient shows significant correlation relationships between the independent variables and the followings: 1. Desired management of the local unit at 0.05 level of significance in terms of the variables of age, marital status, family size and financial constraints. 2. Desired strategy of the local unit at 0.05 level of significance in terms of the variables of marital status and administrative obstacles, and at 0.01 level of significance in terms of the variables of age, the importance of decentralization and organizational obstacles. 3. Desired financial affairs at 0.05 level of significance for the variables of age, marital status, income and organizational obstacles, and at 0.01 level of significance in terms of the variables of work experience and the importance of decentralization. To interpret the total variation of respondents' viewpoints towards decentralization, Step-wiseanalys is proves that: 1. Significantly correlated variables of income, openness and organizational constraints help explain 16.8% of total disparity of change in the desired level of management at 0.05 level of significance. 2. The variables of age and income that are significantly correlated help explain 22.8% of the disparity of change in strategy of local unit at 0.01 level of significance. 3. The variables of age and the relationship of the local unit to other organizations help explain 22.8% of the disparity of change in decision making on financial affairs at 0.01 level of significance. Followings are some of recommendations by study: 1. It is necessary to have a viable legislative structure that supports decentralization. 2. The current Law No. 43 of 1979 should be replaced by new one to be in line with desired decentralization. 3- Authorities granted to village local units need to be reconsidered in order to enhance their ability to manage public facilities in rural areas. 4. Much work should be devoted to increase the financial resources of village local units to achieve sustainable development. 5- It is important to enrich the administrative efficiency and prepare qualified human resources to carry out administrative work in decentralized manner.