Issue AddressedLocal governments are well‐placed to respond to communities' health and wellbeing needs. However, in the Australian state of Tasmania, the sector's roles in that respect are unclear.MethodsWe interviewed 10 municipal personnel in Tasmania to understand their views on local governments' community health and wellbeing functions.ResultsParticipants had an integrative understanding of community health and wellbeing and recognised that collective effort from all tiers of government, community members, and other place‐based stakeholders would improve outcomes. They identified several roles local governments have to support and drive such improvements, including in relation to diverse place‐specific determinants of health and wellbeing. Capacity and capability to fulfil what is needed varied, with rural and remote councils generally less able than urban counterparts to respond consistently or comprehensively to community members' complex needs. However, in the presence of clear expectations and parameters, and appropriate support from other tiers of government, participants were eager for their councils to do more to improve their communities' health and wellbeing, including via a mandate in legislation.ConclusionLocal governments have the potential to do more to improve health and wellbeing outcomes in Tasmania, and the greatest gains could be made by addressing spatial inequalities faced by the sector. That insight is extensible to other comparable jurisdictions.So What?We argue the need both for a shared societal goal of equitable wellbeing supported by all tiers of government and for actions proportionate to the needs of council areas.