Inter-municipal cooperation (IMC) is one of the key tools for implementing decentralization reform in Ukraine. It enables communities to use the resources and powers granted to them more effectively, address common challenges, ensure infrastructure development, and improve the quality of services provided to the public. Under martial law, the importance of IMC is growing, as cooperation between communities helps increase resilience, capacity, and the implementation of projects that, for various reasons, cannot be carried out independently. However, despite the positive results, there are significant challenges in the areas of legal regulation, financing, and monitoring of IMC, which necessitates the improvement of legislative and institutional mechanisms. The purpose of this article is to develop institutional proposals aimed at stimulating inter-municipal cooperation as a catalyst for sustainable development at the regional level, to conduct a comprehensive analysis of the current state of application and development of IMC mechanisms in Ukraine, to identify key institutional and financial barriers that hinder the scaling up of cooperation among territorial communities, and to develop recommendations that can be applied by local authorities, regional state administrations, and central government bodies to enhance the effectiveness of IMC and promote the sustainable development of regions. The current state and challenges of intermunicipal cooperation processes in Ukraine have been examined. The current state of intermunicipal cooperation in Ukraine was analyzed, key problems hindering its development were identified, existing institutional mechanisms and their impact on the development of cooperation were examined, and proposals were made to improve the regulatory, legal, and financial framework for intermunicipal cooperation processes in Ukraine. It is noted that to strengthen the role of intermunicipal cooperation, it is necessary to create a modern institutional environment that will ensure the simplification, effectiveness, and financial foundation of community cooperation mechanisms. The proposed institutional solutions can serve as a basis for enhancing the capacity of local communities, reducing development disparities, and formulating long-term strategies for sustainable regional development. 

inter-municipal cooperation, regional development, cooperation, economic capacity, sustainable development