The decentralization reform in Ukraine is expected to give a significant boost to the socio-economic development of small administrative jurisdictions. There are some positive developments across the country. However, several factors are slowing down the achievement of a tangible effect. They are related to the significantly uneven socio-economic potential, limited financial capabilities, a weak institutional environment, the lack of proper communication between the authorities and citizens, and insufficiently effective control. What is considered the main advantage of decentralization, namely close social ties in the community and better knowledge of local conditions, may turn into an intensification of the corruption factor due to the capture of power by the local elite, which creates significant obstacles to development. The article attempts to determine how likely it is that corruption barriers will form to ensure local socio-economic development through decentralization of power in Ukraine. The emphasis is on the phenomenon of “elite capture” of local jurisdictions at the level of rural territorial communities (RTCs). Modern scientific research mostly attributes corruption to serious problems that affect countries all over the world, including corruption in small, fragmented jurisdictions. Unfortunately, the lack of periodic and systematic information, for the preparation for which state statistics were not sufficiently prepared, does not allow assessing the experience gained by RTCs. Empirical analysis of community budgets confirms the extremely unequal conditions of their functioning, as well as efforts to improve the well-being of residents, although the state is taking steps to level the situation. Decentralization, despite its positive impact on development, creates prerequisites for the spread of local corruption in the form of elite capture, i.e., dominant groups of the population. The course of the capture process is diverse: from purposeful actions, when outsiders interfere in elections and manipulate their results, trying to promote “their” candidate, to gradual capture, when individuals involved in the management of community resources are gradually drawn into the circle of corrupt actions. The realization of the positive effects of decentralization can be ensured to the extent to which development is carried out based on community participation. The main advantage of such an approach is the possibility of better considering the knowledge of residents of local conditions and limitations in the use of resources owned by communities, as well as in the dense network of continuous interpersonal interactions that constitute community life.