This study explores the local municipality as an important arena for developing and implementing initiatives for a transition to long-term sustainable development. It focuses on institutional conditions that support the integration of ‘radical’, transition-oriented perspectives and ideas (i.e. perspectives stressing the need for changed social power relations and ‘other’ norms and visions for the future,) in local governance, with a specific focus on small municipalities. Inspired by transition literature and theory on institutional capacity, the paper explores frames of reference, relational resources, and mobilisation capacity. Empirically, the paper builds on research in two small municipalities in Sweden, where we studied documents on policy for local development, and energy and land-use planning, and carried out qualitative interviews with politicians, planners, and actors from local industry and civil society. The study provides a rich empirical illustration of specific conditions that affect the possibilities to work with transition-oriented perspectives in small municipalities.