Loup City became the county seat of Sherman County in the first election on April 4, 1873. The city was first incorporated as a village on January 28, 1881, and became a second class city in March of 1908.

Loup City has a mayor-council form of government. The council consists of four members all of which are elected for a four-year term. Loup City has five boards whose members are appointed by the mayor and approved by the city council.

The city council meets in regular session on the first Tuesday of each month. Meetings are open to the public and are held in the council chambers of the Municipal Building.