"Local news helps us understand the issues that matter in our communities," explained chief executive Mark Zuckerberg on his page on Monday.
The update will initially apply to the US before it is rolled out more widely.
It comes after Facebook announced that it was making posts from businesses, brands and media less prominent.
"Starting today, we're going to show more stories from news sources in your local town or city," Mr Zuckerberg said in his post.
"If you follow a local publisher or if someone shares a local story, it may show up higher in News Feed," he added.
Mr Zuckerberg said that Facebook users who are made aware of what is happening in their communities will be more likely to get involved and "make a difference".
"Research suggests that reading local news is directly correlated with civic engagement," he said.
He added that the changes were part of the company's drive to show more "high quality, trusted news".
In a company statement, Facebook said that the "See First" feature will allow users to choose which news sources, including local or national publications, they want to see at the top of their feeds.
The social media company is making a series of changes to its website and app following criticism over the appearance of misleading news and misinformation in users' feeds.
The company has acknowledged that media organisations posting on its site may see the popularity of their posts decrease as a result.
Earlier this month, Mr Zuckerberg said that he and his team felt a responsibility to make sure that Facebook was good for people's wellbeing.
If public content is to be promoted, he said at the time, it will now have to be seen to encourage community interaction.