The Municipality of Knysna was constituted on 12 October 1881 under provision of proclamation No 169 in terms of Ordinance No 9 of 1836.

In terms of the Local Government: Municipal Structures Act, 1998 (Act 117 of 1998) the existing Municipality of Knysna, Sedgefield Transitional Local Council, Belvidere Estate Transitional Local Council, Brenton Transitional Local Council, Knoetzie Transitional Local Council, Outeniqua Transitional Representative Council and Rheenendal Transitional Local Council was disestablished and the Knysna Local Municipality established (Province of Western Cape Provincial Gazette Extraordinary No 5592, 22 September 2000, Provincial Notice No 504, 22 September 2000). The Knysna Local Municipality forms part of the larger Garden Route (formerly Eden) District Municipality.