The Commission on Local Government was created February 28, 1979, by an act of the General Assembly, and formally began operation in January, 1980. It was created at the urging of a joint Virginia Municipal League-Virginia Association of Counties task force studying annexation and boundary change laws. The Commission originally was placed under the Secretary of Commerce and Resources, and on June 7, 1983 under the Secretary of Administration and Finance. Effective July 1, 1984, the secretariats divided, and the Commission was placed under the authority of the Secretary of Administration.

The Commission's major activities include assisting in the mediation and negotiated settlement of local boundary change and governmental transition issues; reviewing proposed annexations, petitions for partial county immunity from annexation, voluntary boundary adjustments, town incorporations, town or county transitions city transitions to town status, and interlocal agreements relative to such issues, and rendering findings of fact and recommendations to the affected local governments and to the courts; assisting local governmental issues, upon request, in the investigation and analysis of other local governmental issues; developing fiscal impact statements for submission to the General Assembly on all legislation introduced which may require one or more local governments to establish a new or expand an existing public service (State and Federal mandates); undertaking comparative analysis of local fiscal conditions; providing a liaison service between the state and its localities relative to annexation issues. The Commission consists of five members who are appointed by the governor and confirmed by the General Assembly for five-year terms, with the term of one member expiring each year, subject to reappointment. Reports on annexation actions, settlement agreements, and agreements defining annexation rights are published as developed, and fiscal issues are addressed in "Comparative Revenue Capacity, Revenue Effort, and Fiscal Stress of Virginia's Counties and Cities, 1985/86 and 1986/87," prepared for the General Assembly.

he staff of the Commission provides assistance to the Local Government Advisory Council. This body, which was established by statute in 1978, serves as a forum for the discussion of state-local issues and other governmental concerns in the commonwealth. The chairman of the Council is the governor, other members are the lieutenant governor, executive directors of the Virginia Municipal League and the Virginia Association of Counties, and 22 members of local governing bodies throughout Virginia representing each of Virginia's 22 planning districts. In 1990, the Local Government Advisory Council was reorganized and was renamed the Virginia Advisory Commission on Intergovernmental Relations. The reorganization of this body included a reduction in size, reconfigured to include six legislators, a private citizen, and a member of a regional planning district. Other changes included the method of appointment, schedule of elections, and the number of meetings required. Pursuant to Chapter 55, 2004 Virginia Acts of Assembly, the Virginia Advisory Commission on Intergovernmental Relations was abolished effective July 1, 2004.

The Commission on Local Government was abolished as a separate agency by an act of the General Assembly in 2003, and on June 16, 2003, the Commission on Local Government was placed within the Dept. of Housing and Community Development.