The purpose of this article is to examine the impacts of e-government in Canada on both inter-governmental relations and local governance. The rationale for such an examination stems from the emergence, over the past decade of two parallel discourses in public sector and governance reform: first, e-government as primarily a set of national and provincial strategies for public sector reforms, and secondly, a discourse has focused on the rising importance of municipal government and local governance systems. The main problem at present remains the absence of more holistic thinking on the need for a new enterprise, federated architecture for collaboration that entails an overhaul of the existing political arrangements of the federation. An additional lesson to draw at present is that the weak status and limited capacities of Canada's municipalities, a concern predating e-government's emergence, risk amplification as a governance handicap for both individual communities and the country in adapting to a more digital age. However, the consequences of the weakness also depend on how provincial and federal governments respond to the erosion of public trust by adapting their own structures, as well as the effectiveness of emerging top-down mechanisms being deployed to strengthen the infrastructure of cities and communities.