Most of the Croatian territory is rural area. The rural area is mostly characterized by low employment, poor infrastructure, lack of educational institutions, etc. The first major change in terms of rural development occured during the pre-accession negotiations with the European Union. During this period Croatia had been given some funds, through the SAPARD and IPARD programs, to finance projects and to promote rural development. But some significant funding began with Croatia’s admittance into the European Union. LEADER approach started with the implementation in the year 2010th, when the establishment of Local Action Group (further see as LAG) beggins. LAGs are made of civil, commercial and public sector joint through the mission of development of a certain rural areas. Since its establishment, LAGs are faced with a wide range of problems such as lack of support from the government, the passivity of the population, lack of educated personnel and others. Further work and investments are required in order for local people to become aware of LAG’s importance and, for local people to get involved in the development of their community. The potential of Croatian villages is great, but the progress of their development is still too insignificant.