Panchayati Raj Institutions (PRIs) are the cornerstone of local self government and it provides democratic platform for people's participation at various levels of governance in India. PRIs have been given constitutional status through 73rd Constitutional Amendment in 1992 to make democracy more functional at the local level and driven by citizens needs in addition to with their participation to ensure economic development, strengthen social justice and implementing Central as well as State government welfare schemes including those 29 subjects listed in the Eleventh schedule. In its present form and structure, the PRIs in Andaman and Nicobar Islands have completed three decades of existence and well entrenched with the rural life and have brought about major development in Andaman and Nicobar Islands. However, a lot remains to be done in order to further deepen decentralization and strengthen democracy at the grass root level in the absence of legislature at Union Territory level. Given the general conceptual implication, the present paper seeks to make an in-depth study of issues and challenges encounter by PRIs in Andaman and Nicobar Islands in particular. Keywords: Governance, Participation, Gram Sabha, Zilla Parishad.