Regional Branding and Brand Clustering are very prominent phenomena during the process of industry cluster development. After providing a model-illustrating concept of regional brand formation, this essay further points out that local government is an indispensable medium variable during the formation of local brands. Government plays a noticeably more important role than market creation does during this process. Administrative preferences, policy orientation, creativity and the learning ability that a local government demonstrates in building regional brands, together with the quality and efficiency in managing local brands, will to a large extent dominate regional brands in terms of their evolution direction and speed, as well as their level of sustainability. Government should play diverse roles and have various functional positioning and policy orientation at different stages of regional brand formation. Owing to various public policy needs, which derived from different time-and-space condition of regional brand development, the local administration should make real-time role conversion and management innovation.