This study was be carried out in Nyakagyeme Sub- County which has eight Parishes that is to say, Kabwoma, Kahoko, Kigaaga, Kitimba, Masya, Nyakinengo, Rushasha and Rwerere Parish. Historically, the people of Nyakagyeme sub- County came together with the rest of the people of Rukungiri dIstrict from the present Kabale through Kigezi land to the present Nyakagyeme Sub- County. The Sub- County is generally a plain iand. The climate of Nyakagyeme Sub- County is characterised by two seasons of dry and wet seasons. The wet season begins in the month of April and ends in August and the dry season commences in September up to March every year. The objectives of the study include; to find out the concept and mechanism of decentralisatlon policy, to examine the challenges of decentrallsation policy and way forward and to analyse the effects of decentralisation on service delivery to the community of Nyakagyeme Sub-County and providing recommendations for effective implementation of the decentralisation policy in order to attain good governance and effective service delivery. The data was obtained through observation, interviews, and questionnaires using qualitative research design. The major findings were concept of decentralisatlon for example involving local participation in the management of resources and politics; transfer of administrative, flnanciai and planning from central authority to the local government at the grass root level; the study also found out the main effect of decentralisation being social participation. Easy access has been made in the social services iike roads, schools, medical facilities and markets. The community faces the challenges of corruption by the Local government officials, incompetence of some staffs, work load given to the staff at the local level. In light of the above discoveries, recommendations were made for effective implementatIon of decentralisatlon policy, for example, consultation on the eliglbiilty of the area to be decentralised If really it has the potentiality of implementation of decentralisation policy; increase In the treasury of the respectIve districts from the national budget in order to make them capable of runnIng their programmes.