The necessity and urgency of administrative-territorial reform in Ukraine are underlined. The main factors which should be taken into account during the changing of administrative-territorial structure of the state are named. The most actual questions, related to conducting administrative-territorial reform, are named and shortly analyzed. From the point of view of the authors, some measures which could quickly improve financial state of now existing rural communities and their management before the full implementation in life of proposed by the power reforms are suggested. In the transition from administrative-command to market economy there was a significant reduction in production or full stop of existing enterprises in small settlements. This has resulted in a sharp decrease in revenues to the local budgets, total unemployment and a significant reduction in the population. In such circumstances, life itself dictates necessity of changes and the question of effective management of administrative and territorial units and preservation of their infrastructure becomes extremely important. The most important thing is to determine, what changes are needed and which improvements in the life of communities they are able to provide in the short term. On the one hand, the radical changes envisaged by the new legislation should be made or the regions should be eliminated, and after enlargement of districts, counties should be created together with eliminating regional and district administrations. On the other hand, existing rural communities should be enabled to control the resources which belong to them but, due to various reasons, are not controlled by them. In our opinion, reforming the administrative-territorial structure should take into account the natural, economic, historical, ethnic, cultural, social and other factors, which are currently affecting the socio-economic development of the existing communities and which will seriously influence the socio-economic life of the newly formed associations of citizens in the future. Works of many professionals in the fields of social and economic geography, public administration, regional economics, etc. are dedicated to the research of characteristics of administrative-territorial reform of our country. Processing of these publications has shown that many of the problems associated with reform are not investigated enough and this issue will be extremely important for the government, academics and citizens of Ukraine for a long time. The purpose of this research aims to highlight the specific characteristics and problems of administrative-territorial reform in Ukraine. The objective is connected with implementation of the following tasks: evaluation of socio-economic situation of the currently existing rural communities; identification and analysis of the most appropriate for the citizens and government conditions of communities’ formation; studying the opportunities for citizens to obtain material and financial resources. Reforms of administrative-territorial structure have already been conducted in many European countries. Our country is also facing this problem: being a part of the former USSR, its administrative-territorial structure has been repeatedly changing (some administrative-territorial units disappeared, the new ones appeared; boundaries of regions and districts changed as well as their number). Inefficiency of administration in Ukrainian regions is so obvious, that immediate and decisive actions are required. The question is how reformation will be conducted and how positive would it be from the point of view of state and regional management and social-economic life of communities. Of course, the country’s leadership insists on “voluntary” radical changes. To make these changes there are a necessary legislative framework, agreement on financing, the orders of the government and regional administrations, etc. But there is another way, for example, to eliminate regions, to enlarge districts, to create counties, to shorten the apparatus in rural councils and to keep only the heads of these councils. Those persons who apply for the position of the head of the council, should be at the same time registrated as a candidates for deputies of the county council. In the case of election, they would lead the community and represent them at the district level. In addition, all the resources which belong to now existing rural communities, but are not controlled by them because of different reasons, should be immediately transmitted to their disposal. It will create conditions for their financial independence. To sum up, a conclusion is obvious, that the main problem is not about the area and structure of administrative and territorial units, but about the effectiveness of management in communities and counties as well as about efficiency of their economic activities. There is every reason to believe, that even now, before the complete implementation of administrative-territorial reform, on condition of reduction of staff working in rural councils, empowering heads (village elders) with powers of district (county) deputies and transmission of real financial sources to the hands of the community, there are all possibilities to improve the financial condition of existing rural communities significantly.