It is the aim of this paper to analyze the “meaning” or “making sense” of democratic institution building on the side of peacebuilders and domestic actors at the sub-national level in Kosovo. Over the past years, Kosovo has become increasingly committed to a strongly decentralized framework of governance. This is due to decentralization being regarded a peacebuilding strategy that might accommodate the needs of Serb or Albanian communities while keeping Kosovo a single political entity. Kosovar municipalities hold responsibility over a broad range of service sectors – including not only common services such as street paving, or sanitation, but also health care, education, and social services (KLG 2008:3). Communities are the first and sometimes only point of contact between citizens and state. Hence, the community level is of special importance for the peacebuilding project in Kosovo and the external promotion of liberal democratic institutions targets the sub-national as much as the national level. However, while peacebuilders aim to introduce institutions based on principles of good governance, democracy and rule of law, the local meaning attached to externally induced democratic reforms rarely conforms with the peacebuilders’ initial ideas. Distinguishing between the peacebuilders’ instruments of democracy assistance, conditionality and supervision (Grimm 2010), this paper asks a) which meaning is given to democratic institutions by peacebuilders and the local political elite, b) whether the meaning given to by the two groups converges or diverges depending on the instrument used. To systematically investigate the meaning of democratic institutions at the sub-national level, this paper uses a within case comparison of two Kosovar communities with different institutional setups and analyzes the meaning of democratic institutions at three levels (fundamental principles, organizing principles, and standardized procedures) (Wiener 2009). As an example, one democratic reform initiative in the field of democratic governance (administration reform) is portrayed. Data gathering and analysis is based on qualitative methods of empirical inquiry such as document analysis, and semi-structured interviews with local actors in political and administrative positions and members of the peacebuilding community.