This study investigates the relationship between organizational structure and transformational leadership practices within local governments of Nepal. Transformational leadership was assessed using subscales of charismatic leadership, including vision, role modeling, inspirational communication, and intellectual stimulation. Organizational structure dimensions included hierarchical authority, lateral and upward communication, human resource bureaucracy, procurement bureaucracy, and performance measurement. Data were collected from 206 respondents from local levels of Bagmati and Madhesh provinces and analyzed using descriptive and inferential statistical techniques, including regression analysis. Findings reveal a positive relationship between lateral/upward communication, performance measurement use, and transformational leadership. However, hierarchical authority, human resource red tape, and procurement red tape showed no significant impact. This research highlights the potential of transformational leadership in navigating organizational challenges within the Nepalese public sector. The study concludes that effective communication and performance measurement systems are critical for fostering transformational leadership in local governments, offering practical implications for public sector reforms in Nepal and similar contexts globally.