Who regulates sexuality in America? Given the high salience of federal laws and policies such as the Defense of Marriage Act (“DOMA”), the military’s “Don’t Ask, Don’t Tell” policy, and states’ legal activism regarding same-sex marriage, it would seem that sexuality is mostly a federal and state matter, and that cities play a secondary, if not insignificant role. This Article argues that in fact the opposite is true: the regulation of sexuality has been decentralized, with cities being the main locus where the most important issues affecting the lives of gays and lesbians are decided. This “localization of sexuality” happened as a result of a lack of comprehensive federal protection of gays and lesbians, the limited protection given to them by states, and the powers which cities regularly possess. These powers, which include zoning, business licensing, districting, education, and other police powers, are used by cities in ways that either benefit or harm sexual minorities. This legal structure can partly explain, notwithstanding other social and historical factors, the residential patterns of gays and lesbians who continue to concentrate in a relatively small number of cities. This “territorialization of sexuality,” this Article contends, is a result of the attempt made by gays and lesbians to overcome their status as a permanent minority at both the federal and state levels. While these processes have gone almost unnoticed by scholars and courts, they have far-reaching consequences that this Article describes and evaluates: they enable the creation of safe havens for gays and lesbians, they allow these sexual minorities to “dissent by deciding,” and they promote a pluralism of governmental practices concerning sexuality. Despite the risks that these two processes bear, such as fragmentation and radicalization, the localization of sexuality is a desirable legal structure. It should, however, be accompanied by more comprehensive federal protections of gays and lesbians that would counter the Madisonian risk of extremely powerful localities.