Cities in Israel are regulating religion and controlling religious liberty. They decide whether to close down roads during the Sabbath, whether to limit the selling of pork meat within their jurisdiction, whether to prohibit sex stores from opening, and whether to allocate budgets and lands to religious activities. They do all that by using their regular local powers as well as special enablement laws which the Israeli parliament enacts from time to time. The immediacy of these issues, the fact that the traditional powers – business licensing, traffic and road control, spending, and more – of local authorities touch upon many of them, and the inability of central government to obtain a nationwide consensus over religious matters have caused the localisation of religious liberty in Israel. In addition, some legal rules induce and even force religious-based residential segregation, thus resulting in a relative religious homogeneity of local populations. Hence, cities are able to decide to advance a religious – or a secular – agenda much more easily than the national councils. This process, however, has gone unnoticed by most scholars and courts. As a result, religious liberty doctrine has failed to live up to the challenges Israel is now facing: growing religious and national extremism and the ensuing risk of fragmentation and oppression of minorities. This article shifts the focus from the role of central government in regulating religion to that of cities. I argue that the particular form of decentralisation of religious liberty in Israel has a mixed outcome: it has helped to weaken the monopoly of orthodox Judaism in some locations and enabled diverse communities to flourish and express their unique religious vision; but it has also radicalised some religious practices, exacerbated tensions among competing religions and denominations, heightened religious-based residential segregation and jeopardised minorities.