Being a densely populous country, addressing the socio-economic and health crises resulted from COVID-19 was a huge challenge for central and local government in Bangladesh. Literature assessing the role of central government during pandemic is enormous, yet there exist very scanty of attempts to explore the role of local government institutions (LGIs) in the ongoing pandemic. This paper fills these gaps in knowledge by making an attempt to assess the measures taken by LGIs to address the issues around pandemic situation. Finally, it comes up with a set of policy suggestions to enhance the capacity of LGIs to address the health related issues resulted from the pandemic. Finding suggests that the Local Government (City Corporation) Act, 2009 and the Local Government (Paurashava) Act, 2009 lays out the foundation and gives mandates for the Paurashavas and the City Corporations to play role during the crisis like the pandemic COVID-19. The LGIs helped Government implementing a range of measures to protect the public health and other well beings. Such measures include- implementation of social distancing protocols, banning of public rallies, community gathering, closure of institutions after designated time. In implementing these measures, LGIs have encountered a range of bottlenecks covering institutional, financial, and administrative and others. In line with the identified problems necessary policy suggestions are made to enhance the capacity of LUIs to address the pandemic situation both now and the future.