The study examined the relationship between institutional implementation capacity in Parish Development Model (PDM) execution and local economic development outcomes in Kampala District, Uganda. The Parish Development Model, launched by the Government of Uganda in 2022, aimed to transform subsistence households into the money economy through a multi-sectoral approach targeting wealth creation at the parish level. Institutional implementation capacity, encompassing organizational structures, human resource capabilities, financial management systems, and monitoring and evaluation mechanisms, was recognized as critical for translating PDM policy objectives into tangible economic development outcomes. The study investigated how institutional capacity in PDM implementing agencies including district local governments, sub-county administrations, and parish development committees influenced local economic development indicators including household income growth, employment creation, enterprise development, and poverty reduction in Kampala District's peri-urban and urban poor settlements. The study employed a correlational research design with mixed-methods approach, though predominantly quantitative. A sample of 284 PDM beneficiary households, 48 PDM implementing officials, and 12 parish development committee members from 12 parishes across Kampala District's five divisions participated in the study. Purposive sampling selected parishes with active PDM implementation for at least 18 months, while simple random sampling identified beneficiary households from PDM beneficiary registers. Data were collected using structured questionnaires with 5-point Likert scale items measuring institutional implementation capacity (38 items across organizational structure, human resource capacity, financial management, and monitoring and evaluation dimensions) and local economic development outcomes (32 items assessing income growth, employment creation, enterprise development, and poverty reduction). Interview guides supplemented quantitative data with qualitative insights from key informants. Reliability testing yielded Cronbach's alpha coefficients of 0.91 for institutional capacity and 0.88 for economic development outcomes. Data analysis employed Pearson's correlation coefficient, multiple regression analysis, and thematic analysis for qualitative data using SPSS version 26 and NVivo 12. Findings revealed a significant positive relationship (r = 0.756, p < 0.01) between institutional implementation capacity and local economic development outcomes. Among institutional capacity dimensions, monitoring and evaluation capacity demonstrated the strongest correlation (r = 0.782, p < 0.01), followed by financial management capacity (r = 0.741, p < 0.01), human resource capacity (r = 0.714, p < 0.01), and organizational structure adequacy (r = 0.687, p < 0.01). Regression analysis indicated that institutional implementation capacity accounted for 57.2% of variance in local economic development outcomes (R² = 0.572, F = 168.94, p < 0.000). Parishes with high institutional implementation capacity recorded significantly higher mean household income growth (M = 4.18, SD = 0.61) compared to those with low capacity (M = 2.76, SD = 0.84). Enterprise development showed the strongest improvement (M = 3.89, SD = 0.73) while poverty reduction recorded moderate gains (M = 3.24, SD = 0.91). Qualitative findings revealed persistent challenges including inadequate staffing, delayed fund disbursements, weak coordination mechanisms, and limited technical support for beneficiaries despite moderate overall institutional capacity. The study concluded that institutional implementation capacity significantly influenced local economic development outcomes in PDM execution in Kampala District. Effective monitoring and evaluation systems emerged as the most critical institutional factor, demonstrating that implementing agencies with robust monitoring frameworks, regular progress tracking, data-driven decision-making, and accountability mechanisms achieved substantially better economic development results. Strong financial management capacity ensured timely fund disbursement, transparent resource utilization, and effective budget execution, directly impacting beneficiaries' ability to establish or expand income-generating activities. The moderate overall institutional capacity levels indicated significant implementation gaps requiring urgent attention to fully realize PDM's transformative potential. The Office of the Prime Minister coordinating PDM should establish comprehensive capacity building programs for all implementing officials focusing on monitoring and evaluation competencies, financial management systems, and beneficiary support mechanisms. The Ministry of Local Government should deploy additional technical staff to parishes and sub-counties specifically dedicated to PDM coordination and beneficiary mentoring. Financial management systems should be digitized to ensure real-time tracking, reduce bureaucratic delays, and enhance transparency. District local governments should strengthen inter-agency coordination mechanisms through regular stakeholder forums, integrated planning systems, and joint monitoring frameworks. Beneficiary selection processes should be made more transparent and participatory to enhance program legitimacy and community ownership. Additionally, comprehensive baseline and endline evaluations should be institutionalized to generate robust evidence on PDM impact and inform continuous program improvement.