Political decentralization allegedly eases basic problems of governance in ethnically diverse societies. I argue here, however, that local and national circumstances determine the extent to which decentralization does or does not produce greater horizontal cooperation or boost equity and accountability. When sub-national units are ethnically heterogeneous, and political decentralization provides new opportunities for the penetration of central government actors in local affairs, devolution can empower local partisan brokers and duplicate at the local level many of the governance problems associated with heterogeneity at the national level. Using new data from the Indian states of Jharkhand and Uttar Pradesh, and replicating a regression-discontinuity design used in my previous work in three other states, I show that electoral quotas designed to benefit marginalized groups have not produced these effects. My results indicate the difficulties of using decentralization to remedy problems of ethnic marginalization at the local level.