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The study examined the effect of Fiscal decentralization and Performance of the health Sector in Local Governments in Uganda; a case of Buvuma District Local Government. Findings revealed that fiscal decentralisation accounted for 37.5% of the variance in the health sector performance. This means that health sector performance is a function of several factors, to include timely delivery of materials and supplies, accessibility of the health facilities, availability of adequate infrastructure and the availability of medical personnel. From the study findings, it was recommended that for Buvuma district to attain sustainable health services, it has to benchmark/lobby from central government for increased funding, adhere to donor requirements to be in position to get donations and local governments advised to create more revenue source so as to increase on their local revenue collection as the only way to increase funding to the health sector. The study also suggested areas of further research which included; "The roles of local stakeholders and health care performance" and also "The causes of poor hygiene on Islands".