Background: Creating conditions for people to exert influence and control within their lives is an important determinant of health, and crucial in addressing health inequity. Globally, governments, communities, and other partners are experimenting with initiatives to support public participation at a local level. Little is known about how different approaches work, and how changing economic circumstances including the worldwide financial crisis and COVID-19 pandemic create challenging circumstances for implementation. This review examined evidence on initiatives to increase peoples’ involvement in local decision-making, with a focus on how this may be affected by resource constraints. Methods: We carried out a mixed-method systematic review of European empirical literature published since 2008, on initiatives aiming to increase public participation in local decision-making/action which could affect public health outcomes. We supplemented this with worldwide literature outlining theories and frameworks to explore potential change pathways. We used narrative synthesis to analyse the literature identified, and a summary diagram to provide a reporting structure.Results: We included 42 documents. Much literature was from the United Kingdom, and of qualitative or case study design. There was limited reporting of the forms and intended/actual functions of initiatives to enhance public participation and influence. Diverse factors (organisational and community-related factors, features of the participatory process) were noted to shape pathways to potential outcomes. Positive and adverse outcomes were reported for communities, individuals, relationships, and the decision-making process. The review highlights how initiatives may be at risk during times of limited resourcing; undermining individual and community capacities to participate, and requiring organisational leaders to think/act differently. Conclusions: Areas to prioritise for action within local governance systems include: supporting community capabilities; relationships between organisations and communities; creating spaces for safe/equitable interaction and knowledge-sharing; and changing institutional culture. If investment is to be made by local governments or communities themselves in times of resource-constraint, there is an urgent need to clarify the functions of different activities and pathways to improvements in determinants of health and inequity. Support to enable change is needed, particularly in response to deep-seated issues within local governance systems, and more explicit engagement with concepts of politics and power.