The "Local Authorities Act 1902" abolished divisional boards and created city, town and shire councils. Thus, existing divisional boards were constituted as shire councils. Under this Act, on 31 Mar 1903, the Murilla Shire Council was created assuming the powers and functions of the defunct Murilla Divisional Board. The shire encompassed the towns of Miles, Drillham, Dulacca, Condamine and the surrounding areas.
The primary function of shire councils as provided by the Local Authorities Act was to provide such public services and amenities as roads, bridges, water, sanitation and drainage, public health services, parks and reserves, cemeteries, libraries and recreational facilities, street lighting, etc.
Council also had powers in relation to the construction of buildings, fire prevention, public nuisances, places of amusement, public carriers, slaughter houses, markets, animals and traffic, etc. Increased powers were given to Council by subsequent local government legislation, for example, in the areas of public health, building regulation, town planning and the environment, public utilities and business undertakings.
The Council was also responsible for administering the Local Fund, and for valuing properties within the shire for the purpose of determining and collecting rates, which together with endowments and loans formed its revenue base. The general powers of Council were exercised through the passing of by-laws approved by Governor-in-Council.
The shire was governed by a rate-payer elected council comprising a Chairman/Mayor and Councillors. Special or general purpose committees reporting to the full Council (e.g. Works, Finance, Water and Sewerage, Parks and Gardens, Environmental Health, etc) were appointed for managing those functions. Council appointed its own officers to administer its business, headed by a Shire Clerk/Chief Executive Officer. The shire was divided for electoral and administrative purposes into three divisions, centered on the towns of Miles, Drillham and Dulacca and Condamine.
On 15 March 2008, Murilla Shire amalgamated with Dalby Town, Wambo, Tara and Chinchilla Shires and Division 2 of Taroom Shire (Wandoan area) to form Dalby Region.