Serbian towns and municipalities adopted Local Sustainable Development Strategy Paper in May 2005 as a strategic framework for local authorities to establish local sustainable development processes. So far more than 30 (from 167) municipalities in Serbia adopted Local Sustainable Development Strategies and initiated the implementation of Local Agenda 21. This paper discusses the case study of Serbia as an example how countries in transition should implement local policies of sustainable development and what obstacles such countries can face on the road toward the sustainability.