Local Govemment Institution Development has continuously been performed in line with the changes of decentralization policy. A basic question interesting to study is ?Can institution development which has continuously been performed created tl1e ability of local government institution to carry out government autonomy regions? This question is relevant to propose knowing that there have still been complex problems for an institution ability to cany out local government.Realizing that the complex problems, his research is aimed to describe and analyze the ability of local govemment institution in carrying out the provision of urban infrastructures based on three dimensions of institutional development. Firstly, the effectiveness of local government institution in carrying out the functions of planning and performing. Secondly, the direction changes of local government institution in response to decentralization policy. Thirdly, institutionalizations process in local government institution. The other aim of this research is constructing models of the systems of local government institution to solve the three problems mentioned above.Based on the above aims, approaches of qualitative and system thinking are used to carry out this research. The usage of qualitative approach was needed to examine the capability of local government institution in implementing the function of providing urban infrastructures through understanding of understanding process, while the system approach was used to analyze the relationship among the phenomenon systemically and as an effort to solve the institution development problems which was also faced systemically. The system approach used is Sof? System Methodology (SSM). The working principles of this methodology are examining phenomenon in the real world based on understanding of understanding to the phenomenon and then building a system model of solving problems through learning process based on the Same of system thinking.Referring to the analysis results and their relevance to the research aims, some conclusions could be drawn. Firstly, the development of the structure and function of local government institution in Malang Regency in implementing the function of providing urban infrastructures shows that there are local institutions having double Emotion and post. It is indicated by the existance of conflict configuration in implementing those two functions. Secondly, based on some standardization indicators of either planning process or working implementation, local govemment institution in implementing the limction of providing urban infrastructures proves ineffective.Thirdly, in giving response to decentralization policy local government tends to choose dynamic conservatism strategy and the model of local government performed by Malang Regency is traditional bureaucratic authority model. Fourthly, institutionalization within local government institution either in the institutional level or in the perspectives of inter-actor relationship in implementing the function of providing urban infrastructures is not yet optimal. Fiithly, based on using soft system analyses, it can be constructed four models of development systems of local government institution oriented on solving problems. The four models are: the effectivity system models of local government institution in performing the function of planning and of implementing, the direction system model of local government changes, and the institutionalization system model within local govemment institution.This research gives tive recommendations. Firstly, the development of local government institution to increase the quality of urban infrastructure provision should be based on definite standardization conforming to the authority and function implemented by local institutions. The usage of the standardization should be directed to the efforts of overcoming the conflict happens in the unit of local government institution in carrying out its function. Secondly, local government institution should, in implementing the function of urban structure provision, involve private and commtmity participation. The institution involvement refers to the implementation of local government using either community enabling authority or marker enabling authority model, its implementation should be conformed with the social structure of local community. Thirdly, government institution needs to increase its institutionalization process in carrying out the function of urban infrastructure provision by building shared value in terms of bringing the balance between high and low formalization, independence and interdependence, and also the transformation balance between top-down and bottom-up actor behavior. Fourthly, local government institution needs to construct local government institution model system to implement the function of urban infrastructure provision along with monitor and control subsystem whose function is to control the function. The monitor and control subsystem should be formulated by stakeholders using clear performance measurement and its implementation is performed by an institution having an authority in its field.