The purpose of this paper was to determine the most important capacity building component for the localization process, focusing on international Non-Governmental Organizations (NGOs) in the Lao People's Democratic Republic (hereafter the Lao PDR). Data were collected from Lao senior staff and expatriate NGO representatives (over 20 informants in total) by face-to-face interview during June-July 2002, in Vientiane, Lao PDR. Each interview was focused on 1) perception of localization, 2) organizational capacity, 3) vision of localization, and 4) NGO leadership, and 5) local NGOs in application with the organizational capacity building model by IDRC (International Development Research Centre). Informants showed a positive understanding to a definition of localization: as a process of organizational change focusing on how to delegate organizational performance initiatives from the international side (expatriates) to the local side (local staff). Furthermore, they assessed currently their “human resource management” and “program management” as most advanced delegated areas. Through the data analysis and lessons from existing Lao leaders in international NGOs, finally, I concluded that “strategic leadership” was the most important capacity building component towards localization. These findings will be contributed to organizational development within international NGOs and potential local NGOs in the Lao PDR and Japanese NGO community in a translated version. More importantly, the lessons from this research are currently becoming guidelines for capacity building plan towards localization in our field offices in Thailand, Cambodia, and the Lao PDR.