Mediation as a form of out-of-court dispute settlement is not restricted to solution of private law conflicts between individuals and/or enterprises. The new German law, enacted to transform a EU directive of 2008, is also applicable to various conflicts between administrations and citizens, often but not exclusively at the local level. The study deals with possibilities and limits of administration-related mediation procedures at first and then focuses upon the use of this instrument (in its narrow, legal sense) in the course of urban land-use planning. At the end, the authors try to clarify the status of mediation in relation to modern concepts of citizens’ participation and transparent (local) government also taking into account its influence on human rights of people concerned.