I develop and test a new political logic of ethnic local autonomy (minzu quyu zizhi) to explain how the designation of ethnic autonomous territories (EATs) shapes the governance of non-Han groups and sustains the Chinese Communist Party’s rule in post-1949 China. Building on the literatures on authoritarianism, decentralization, and ethnic politics, I argue that the strategic granting of ethnic local autonomy allows the central leader to establish his supremacy over subnational political elites while countering his rivals within the central leadership. Through statistical analysis, elite interviews, and archival research, I demonstrate that ethnic local autonomy is not simply introduced to defuse potential mobilization from non-Han groups. Instead, central leaders designate ethnic autonomous prefectures and counties to constrain the power of recalcitrant provincial elites when they face strong rivals within the Politburo. In a broad vein, my dissertation contributes to the literature on authoritarian power sharing and co-optation by moving the analytical focus beyond the central inner circle. By examining central-local relations in non-democratic states, I show that the most credible anti-regime threats are not necessarily the primary targets of the sharing institutions. Moreover, co-optation can serve as the autocrat’s strategic attempt to address the dilemma of delegation. Furthermore, my dissertation speaks to the literature on ethnic politics, which has largely overlooked the governance of ethnic diversity in non-democratic states and the impact of ethnic cleavages on autocratic survival. My dissertation explores not only the mechanisms through which the granting of ethnic local autonomy takes place but also how such institutional configuration affects regime stability. While most studies have examined how ethnic local autonomy can resolve or prevent ethnic conflicts, I demonstrate that ethnic local autonomy can also protect a regime from collapse by managing agency loss and power struggles within the dominant ethnic group. Unpacking the political dynamics that drive the introduction of ethnic local autonomy will be an important step to clarify how decentralization defuses or exacerbates conflicts.