The paper discusses the link between local governance and rural development in democratic South Africa. It underlines several issues and challenges facing the government's willingness to position local municipalities as the key providers and promoters of development in rural areas. The paper first presents two parallel policy streams that took place since 1994. On the one hand, local government has been gradually established and strengthened, as the third constitutional sphere of governance, in line with an overall decentralization process. On the other hand, rural development has taken a growing place into political discourses from 1994 onwards, and has been promoted or implemented through various policies, legislations and programmes, which has often been conceived and managed centrally, at the national and/or provincial levels. The paper then describes the current situation in terms of linkages between local government and rural development initiatives. It is argued that, in spite of a closer link and integration between overall policies and approaches to rural development (ISRDP) and local government planning tools (IDPs), a series of issues and challenges are still hindering efficient delivery and services towards rural areas and their development. Among other issues, the paper identifies and discusses (1) contradicting approaches that are still combined de facto (liberalism vs. welfarism), (2) the lack of actual participation and the weakness of CSOs in rural South Africa, (3) revenue issues at the rural municipal level, (4) the discussable role of district municipalities, (5) a hidden supply-driven agenda by line departments, along with poor co-ordination among them, and (6) long-living myths about the potential of certain areas, or the possible role of agriculture. The paper concludes with some recommendations, especially stressing the possible role of academics to help and support decision-makers and development operators.