The increasing global discourse on decentralised governance in the contemporary era of socio-economic development has attracted the attention of scholars to explore on the various aspects of such discourses. In India, decentralised self-governing institutions have been emerged as an instrument of promoting socioeconomic development and in the context of tribal areas such process has promoted the institutionalization of Panchayat as part of local self-government. Particularly in the context of the enactments of the 73rd amendment act in 1992 and the Previsions of the Panchayats (Extension to the Scheduled Areas) Act in 1996, the functioning of the Panchayats in tribal areas in Odisha has become a reality. The role the Panchayats in strengthening governance and promoting socio-development in those areas in the state has become a reality. This paper analyses the functioning of the Panchayati Raj Institutions (PRIs) in the scheduled areas in Odisha while highlighting the process of the evolution of Panchayts in these areas. In this context, we highlight the process of evolution since the pre-independence period and how the evolution has reached at the present era, while unraveling the legal provisions and institutional arrangements. Further, the paper also examines the status of the implementation of the PESA Act in the state and how the PRIs in the scheduled areas are functioning as per the provisions of this act. The paper also analyses the secondary data and field notes apart from examining the legal provisions linked with the panchayats in the state. In conclusion, the paper summarises that “the functioning of panchayats in Tribal Areas can’t be termed as a non-event. Further, these institutions can play greater role in the matters of economic development and social justice and this depends upon the extent of the devolution of power and autonomy. Constitutional provision like PESA Act can fill these gaps and effective implementation of this act may lead towards the strengthening governance and promoting healthy development in tribal areas”.