Sixty-four members of the new Regional Council of Banadir were sworn in on Sunday in Mogadishu to act as legislators, formalising a break with Somalia's transitional government.
Somalia has been without government since regional strongmen in 1991 ousted a dictatorship. They then turned on each other, carving the nation of 8.2 million into a patchwork of fiefdoms.
Lengthy peace talks in Kenya led to the formation of a transitional government last year, under President Abdullahi Yusuf, but it quickly split over where it should be based and whether the country needed peacekeepers from neighbouring countries to help establish order.
No immediate comment was available from Yusuf, who is based in Jowhar, north of Mogadishu.
Commerce Minister Muse Sudi Yalahow, one of the three main Mogadishu strongmen and chairman of the committee that chose the new administration, said members consulted widely, including with former presidents.
"We would not surrender to those working for the enemy of Somalia who are against the common good of the people in Mogadishu"
Muse Sudi Yalahow, a member of the breakaway administration
The new council contains mainly members of the Hawiye clan that dominates the capital of about 2 million people, which previously was divided under the control of rival strongmen.
The council also includes minorities such as Mogadishu residents from Somaliland, the northern area that has declared itself a republic separate from the rest of the country.
"We had to talk to everyone willing to help Mogadishu stand on its feet again since our government is a government of reconciliation," Yalahow said.
"But we would not surrender to those working for the enemy of Somalia who are against the common good of the people in Mogadishu."
Francois Lonseny Fall, the UN envoy to Somalia, warned last month that Somalia could become a terrorist haven because it is a failed state where extremist Islamic groups are growing.