Municipalities are considered as the first face of the State for the citizens. At the same time, local governments have a higher level of confidence compared to other political institutions. Despite this, studies on municipalities are not as abundant as others in Chilean political science. In this sense, there are almost no studies that link political trust and institutional capacities at the local level. Moreover, this scarcity is even greater when different levels of measurement are taken into account for the examination of political phenomena at the local scale and for people. To contribute to slowly filling these gaps, the research question in this study is whether the institutional capacities of municipalities influence the political trust that people place in them and, if such influence exists, what that relationship is like. In order to answer this question, a quantitative study is developed with the objective of testing from a contextual level, the municipality, the effect of institutional capacities (administrative-technical; extractive/fiscal, and political) on citizen perceptions referring to trust in the municipality. Given that two levels of measurement are combined, the individual and the communal, a multilevel analysis is proposed with data collected from the Latin American Public Opinion Project (LAPOP) 2016, official electoral data and data from the Chilean municipal information system. The main conclusions are that institutional capacities have effects on trust in local governments from a multi-level dynamic, and that the interaction between the different dimensions of institutional capacity has moderating effects. In other words, the institutional capacities of municipalities, as a context, affect the perceptions, attitudes and behaviours of citizens.