Collaborative efforts in administering the affairs of government are essential for the achievement of national goals. As an intra-sovereign unit of government, the local councils are expected to engage other tiers of government, most especially, the state institutions to promote socio-economic and political development. Ironically, this collaboration has not yielded any positive impact, primarily, as state institutions had continually stampeded these councils. This paper adopted documentary data from notable national and international journals, newspaper publications, books, internet sources and personal observations. System theory was used to reveal the synergy between state’s institutions and local government and their effect on grassroot populace. The paper observed that lack of transparency and accountability were the norm in intergovernmental relations between state institutions and Local Government in Nigeria. Statutory allocations are hijacked by the state, abuse of power by the local government service commission, auditor general of the state became a watched dog to monitor the council’s expenses. It concluded that creation of effective synergy between the state institutions and local government will facilitate cordial relations among the governmental units and foster necessary development. The paper recommended a direct access of the proceeds from the statutory allocations to the Local Governments, relative autonomy should be given to the councils to execute their statutory functions and engagement of proactive and consistent interaction between councils and state institutions on programme formulation and execution. Keywords: Synergy, State Institutions, Local Government, Transparency, Accountability..