Nowadays, the study of indigenous institutions has become one of the key issues amongrnincreasing /lumber of scholars and institutions. Indigenous institutions can play arnsignificant role to achieve local development; this is because, they can offer reasonablernand locally adopted responses to local development problems or they can be combinedrnwith scientific knowledge to improve productivity and living standards of the community.rnAccordingly, close investigation and analysis of these institutions are very important inrnlocal development point of view. This study was conducted to examine the potentialrnindigenous institutions for local development, in Hula Wereda of Sidaallla Zone,rnSouthern Ethiopia. In order to collect data, the study was utilized various datarngenerating instruments like key informants interviews, focus group discussions, personalrnobservations and secondary sources. For key informant interviews, 38 respondents wererninvolved and four focus group discussions were held in various parts of Wereda. Thernsample was drawn by employing a pwposive, non-probability sampling procedure. Thernfinding of study reveals that indigenous institutions are based on norms and values of therncommunity and accessible to community members. The major benefits, these institutionsrnprovide include local service delivery, conflict management, natural resourcernmanagement, local resource mobilizations, source of information and build sense ofrncommunity ownership in local development initiatives. Further, they have paramountrnroles to enhance local agriculture, local income and to other local developmentrnactivities. Generally, they play various social, economic and political roles in localrndevelopment by filling the local development gaps of formal institutions. Accordingly, thernproposed suggestions provided in the conclusion section gives insight in to possiblernstrategies that could be adopted to utilize the roles of these institutions in localrndevelopment. Among others, the study suggests that it seems essential that localrndevelopment policies and programs must take into account these institutions; this wouldrnbe useful in the proper targeting appropriate solutions for local development problems.rnKey Words: Indigenous Knowledge, Indigenous Institutions, Elders' Institutionrn(Chimessa System), Dee, Jirte, Seera, Qeexaala, Local Development, Hula, Sidaama,rnEthiopia.