Town Panchayats occupy a distinctive position within India’s framework of urban local self-government, particularly in transitional areas experiencing gradual urbanisation. In Tamil Nadu, their legal and administrative foundation is primarily governed by the Tamil Nadu District Municipalities Act, 1920, which predates the constitutionalisation of urban local bodies under the 74th Constitutional Amendment Act, 1992. This study undertakes an analytical examination of the establishment and constitutional status of Town Panchayats, focusing on their statutory origins, constitutional legitimacy, functional responsibilities, and contemporary governance challenges. The research situates Town Panchayats within the broader constitutional framework of decentralisation under Part IX-A of the Constitution and evaluates the extent to which statutory provisions align with constitutional mandates of autonomy, democratic representation, and devolution of powers. It further examines judicial interpretations concerning the constitutional nature of municipal bodies and highlights practical concerns such as financial dependence, administrative control, and the transitional identity of Town Panchayats. By critically analysing statutory provisions and constitutional principles, this study aims to assess whether Town Panchayats function as effective institutions of grassroots urban governance or remain constrained by structural and administrative limitations.