Six months into the pandemic, non-pharmaceutical interventions (e.g., social distancing) are the only available measure to control severe acute respiratory syndrome-coronavirus 2 (SARS-CoV-2) transmission. Around the world, policymakers have implemented localized lockdowns in small geographic areas to prevent spread of the disease. Using an integrated dataset from Chile, we estimated the direct and indirect (spillover) causal effects of localized lockdowns on SARS-CoV-2 transmission. Our results show that the effectiveness of localized lockdowns is strongly modulated by duration and is affected by spillover effects from neighboring geographic areas. Our projections suggest that extending localized lockdowns will slow down the epidemic but by themselves will be unable to control epidemic growth due to spillovers from neighboring areas with high interdependencies, unless those contiguous areas also implement lockdowns.