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The article is devoted to research of preconditions and urgency of the reform of decentralization and change of state administrative-territorial system. The main reasons for the necessity of realization of the reform in Ukraine are determined: excessive fragmentation of territorial communities, subsidization of local budgets, allocation of a significant part of financial resources to the maintenance of the control apparatus, degradation of rural territories, lack of initiatives from local self-government bodies. The article reflects the results of sociological research on Ukrainians' awareness of the decentralization reform, their expectations and the evaluation of the effectiveness of its implementation on the territory of Ukraine. Іt is determined that among the main problems / obstacles in the implementation of the decentralization reform, the respondents distinguish: financial imbalances; inadequate legal framework; lack of clear division of powers between district administration, district councils and UTC; the need to comply with the declared data; lack of awareness of decentralization; the lack of agreement within communities; political processes. The stages of administrative reform implementation in Ukraine are investigated, in accordance with the legislation of Ukraine. The first stage involves the transfer of the state powers to the lowest administrative-territorial level to the newly created united territorial communities (UTC). The second stage of the reform involves the creation of administrative-territorial units of the regional level that is prefectures (counties or districts), empowered with management authorities. The third stage of the reform involves the formation of a third regional level of the ATU of the country.The advantages, intermediate results of the reform in the context of the problem-oriented orientation are shown; the first consequences of the reform were identified, first of all, in the growth of the financial potential of the territory and the strengthening of the resource base of local budgets. Areas of use of financial resources by the united territorial communities are investigated. The emphasis is on changing the course from the consumer position (the expectation of subsidies from district and provincial budgets), to attempts to create an effective administrative apparatus and to direct resources to the communities development, to carry out analysis of budget spending and to prevent cases of inefficient or irrational use.