This research work attempts to assess the impact of Local Government on rural development in Soba and Zaria Local Government areas, Kaduna State. Local Governments were primarily designed to meet the basic needs and aspirations of the rural communities. Fundamentally, government needs to place rural development at the top of the agenda of National Development in realization of the fact that enhanced rural development is a prerequisite for meaningful and sustainable overall national development policies and programmes through the local government. However, rural communities in Nigeria, specifically Soba and Zaria local government are still facing numerous difficulties in terms of infrastructural deficiency, poor human development, which has made rural development imperative. This imbalance has subjected the rural areas to more disadvantaged economic position. With this, the study tries to examine the level of capital funding and community mobilization and participation in effort of rural development. The research work covered the period of 2006 and 2011. Data for the study were collected from both primary and secondary sources. The primary source comprises the used of questionnaire, interview and observation, while the secondary source consists of text books, journals, thesis, manuals and other unpublished papers. Descriptive and inferential statistical tools were used for data presentation and analysis. The Spear man rank coefficient correlation of non parametric tool was used for the analysis of data that leads to the testing of the two hypotheses. It was discovered that inadequate funding has been the bane of rural development in study areas. This is attributable to a lot of draw – backs arising from untold interruptions and control by the higher tiers of governments. It was recommended that, to bring about a more realistic rural development in Nigeria, specifically Soba and Zaria local governments, the local government should minimize their total dependence on the federal allocation, and increase their effort towards generating more revenue through the diversification of their internal revenue sources.