Panchayat Raj System can be truly empowering at grass root level only when it is fully alive to the aspiration and need of the people. It is the management of local affairs by local people through elected local bodies. Grass root democracy based on local participation in which people feel sense of responsibility and make their developmental plan themselves. In Jammu and Kashmir, the roots of Panchayat Raj were planted by Maharaja Hari Singh in 1935 by promulgation of Jammu & Kashmir village Panchayat Regulation No 1. Later on various regulations had been passed from 1936 onward to accession with India that makes the local self-government more strong. In 1989, the Jammu & Kashmir Panchayat Raj Act came into existence. After 12 years of the same, the first Panchayat elections were held in 2001, in which people participated positively and elected theirs representative for local democracy, but somehow it failed. After a gap of 10 years, in 2011 once again Panchayat elections were held, the elected Panchayat worked as a bridge between various government departments, police forces, armed forces and civil population but due to differences between ruling coalition’s political parties in state in relation to devolution of power to local self-government and make it half democratic and same completed theirs tenure on July 2016. In 2016 Governor Assents to the Jammu & Kashmir Panchayat Raj (Amendment) Bill, will now allow indirect election of Sarpanches. The Research paper is deal with the historical study of Panchayat Raj System in Jammu & Kashmir and challenges before it and also suggests solution to make it truly democratic.