The factors most commonly used to measure the quality of life of a population are related to the public services available. In Spain, processes of functional decentralisation and externalisation are implemented by numerous local governments to deliver these services more efficiently, and there may be a relationship between the mode of public services delivery and the quality of life of the local population. Therefore, this paper seeks empirical evidence, using panel data models, of the effects of the functional decentralisation and externalisation of public services on the quality of life of the inhabitants of Spanish municipalities. The results obtained show that this quality of life is higher where the local government makes use of functional decentralisation. However, the results when the private sector is included in the analysis (in the form of externalisation and mixed companies) are ambiguous. More concretely, the quality of life is higher in municipalities where urban services are provided through foundations or autonomous organisations, where public companies provide public transport and health care services, and where trade services are provided by public companies, autonomous organisations or public business entities. The quality of life of inhabitants is enhanced when water services are provided by externalisation or by mixed companies.