The article is devoted to the study of limitations for the development of territorial public self-government in Russia, identification of the potential areas of cooperation with local authorities. Based on a study by the All-Russian Council of Local Self-Government (with the authors’ participation) and a survey of the population on the key issues of the development of territorial public self-government (TPSG) in the Moscow region, the key barriers to the functioning of TPSG are identified: insufficient allocation of funds for its support by the authorities; contradictions in legislation on the functioning of TPSG; low activity of the population to participate in the implementation of their own initiatives, etc. Basing on the results of the studies, it is concluded that in modern Russian conditions there is a low level of institutionalization of public self-government. A new approach to the development of local communities is required – based on the involvement of its “assets” (Asset-Based Community Development), the application of which will ensure activation of all the resources of the local community and build up social capital. On the part of the municipal authorities, it is necessary to create conditions for the inclusion of residents in urban development. In the context of digitalization, the popularization of TOC experience through information and communication technologies is becoming important. Only constructive interaction of public associations with the authorities on the basis of social partnership will make it possible to achieve social justice and reduce mutual distrust.