This study concerns the problem of institutional distance between local government units, and its impact on the cross-border cooperation of regional and local authorities in the Polish-German borderland. Contrary to cross-border cooperation per se, the analyzed notion is not featured regularly in the subject literature. Above all, the existing studies focus on the forms of, barriers to, and conditions for cross-border cooperation, the assessment of cross-border cooperation projects co-financed by the EU, and the broadly conceived social and economic cross-border ties. On the other hand, there is a shortage of studies analyzing the competencies of various local government units with regard to cross-border cooperation. Hence, this article examines the competencies of local government units with respect to cross-border cooperation based on the example of the Polish-German borderland. The adopted research method involves the analysis of the subject literature, domestic legislation in Poland and Germany, and the documents and legal acts of the Council of Europe and the EU.