By the end of the 1990s good governance (GG) was the new catch phrase in development and public policy circles. Good governance is increasingly viewed as a panacea to persisting problems of development and government. Donors, governments (central and local), academe, NGOs and other civil society groups are calling for GG as a requisite for making development programmes and interventions successful. This review examines indicators of local GG. It gives a historical background to GG and overviews the GG agenda. Emerging concepts of good governance are presented with specific references to different literature; and the way forwards towards a framework for defining GG is discussed, with focus on means toward good governance and decentralisation. Key measures of good governance are examined such as participation; new styles of leadership; accountability and transparency; capable public management in economic management, service delivery, sustainable natural resource management and fiscal administration; and respect for law and human rights. The author goes on to propose a manner of constructing a data base of indicators of GG: describing methodology and how to classify the indicators. This is followed by a discussion on who develops and who uses indicators of GG, and emerging issues in defining good local governance. The paper is concluded with some final remarks on the processes of measuring and defining GG.