Service sector is predominantly increasing in modern economic system raising prominence of staff competences in achievement of corporate goals. This study was conducted to examine the relationship between capacity building and organizational performance in local government context, Kasese district, Uganda. Mixed methods research design was used guided by both objective and subjective assumptions to achieve the research objectives. Data was collected at one point in time from Kasese district employees working in different departments including; Finance, Human resource, engineering, health, education and sports, natural resources and community based. 80 respondents were seen to be representative in study considering the Kabale district local government Human Resource Manual (2021) where the district had a total number of 100 employees. Apparently out of 80 questionnaires distributed only 65 were returned well filled making an acceptable response rate of 81.25%. Stratified and simple random sampling approaches guided this whole process in ensuring that every staff members had equal chances of participation. Questionnaire and interview guide was used to collect both quantitative and qualitative data. Study findings confirmed a positive and significant relationship between capacity building and Organizational Performance at Kasese district. Specifically, results reveal that conducting Induction training (Beta= .657, P<.01) is a significant influencer of performance; on the job training programs (Beta = .175, P<01) impact on organisational performance; and off the job training (Beta= .682, P > 01) significantly predict organisational performance. One key recommendation drawn from this study, linked to human capital theory is that institutional managers should prioritize individual employee learning and earmark resources that sufficiently caters for knowledge and skills enhancement.