In 2007, Indonesia enacted Law No. 24/2007 to promote disaster mitigation at the local/sub-national government level. This study aims at measuring local governmental behavior and awareness in promoting disaster mitigation as a response to disaster risks. Our theoretical model shows that the relationship between local government awareness of disaster mitigation and disaster risk forms an inverted U shape. Local governments will allocate more resources to disaster mitigation as a response to increased disaster risk; their budget allocation for disaster mitigation will decrease, however, when the disaster risk goes beyond a certain level. By observing 486 sub-national governments and applying an econometric model, this study confirms that local governments in Indonesia have considered disaster risks to be an important factor in allocating budgets for disaster mitigation. Unfortunately, because they have different priorities as well as budget constraints, more than 50 percent of local governments in Indonesia allocate less than the required amount. This study suggests that local governments should rigorously estimate the amount of budget allocation necessary for disasters in order to minimize damage and losses.