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The Municipality of Oudtshoorn was constituted on 26 August 1863 under provision of Proclamation No 29 of 1863 in terms of Ordinance No 9 of 1836 (Cape of Good Hope Government Gazette, No 3497, 1 September 1863).

In terms of the Local Government: Municipal Structures Act, 1998 (Act 117 of 1998) the existing Oudtshoorn Municipality as well as the De Rust/Blomnek Transitional Local Council, Bo-Langkloof Transitional Representative Council, Dysselsdorp Transitional Council and Oudtshoorn Transitional Representative Council was disestablished and the Oudtshoorn Local Municipality established (Province of Western Cape Provincial Gazette Extraordinary No 5592, 22 September 2000, Provincial Notice No 502, 22 September 2000). The Oudtshoorn Local Municipality forms part of the larger Garden Route District Municipality (previously known as the Eden District Municipality).