The essence of administrative and territorial reform and decentralization reform in Ukraine is to move away from a centralized model of government in the state, ensure the ability of local self-government and build an effective system of territorial power organization in Ukraine based on the principles of subsidiarity, omnipresence and financial self-sufficiency of local self-government. The purpose of the article is to identify areas for improving the effectiveness of the administrative-territorial reform in Ukraine based on assessing the results of its financial decentralization component. Peculiarities of changing the territorial basis of local self-government in Ukraine investigate the necessity of moving from a voluntary amalgamation of territorial communities to the stage of their formation according to clearly defined criteria and providing opportunities for the development of such communities in the future. It focuses on the need to consolidate areas and change the system of interaction of the subregional level with the amalgamated territorial communities at a basic level.